SLM Corporation (NASDAQ:SLM) is one of the most undervalued financial stocks to buy according to Wall Street analysts. During a presentation at the Barclays Global Financial Services Conference on September 9, the company emphasized a strategic shift towards issuing high-quality student loans rather than just growing its loan book. SLM highlighted its ongoing efforts to cut potential origination volume to improve credit quality.
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The company has lowered its origination growth target to 5-6%, choosing to prioritize higher credit quality over increasing loan volume. It also continues to tighten its credit standards; recent loans are of higher quality despite a slight, non-alarming rise in early delinquencies.
SLM noted that legislative changes in Grad PLUS and Parent PLUS loans represent a $4.5 to $5 billion market opportunity. These products cater to borrowers with stronger credit, and SLM’s analysis suggests that the expansion aligns with their risk appetite. To that end, the company is seeking private credit funding partnerships to add capital-light, fee-based streams to complement current strategies.
SLM Corporation is a consumer banking company operating as Sallie Mae Bank. It originates, services, and manages private education loans for undergraduate and graduate students, parents, and career training programs across the United States.
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This article is originally published at Insider Monkey.
