Compass Point downgrades Navient to 'neutral'

Compass Point analyst Giuliano Bologna downgraded Navient Corp. to "neutral" from "buy" and kept the price target for the stock at $18.

Bologna considers Navient well positioned to drive value for shareholders in the medium term and long term, according to a March 31 report. However, the analyst is of the view that the discounted cash flow value of Navient's Federal Family Education Loan Program runoff business will likely be negatively affected in a rising interest rate environment, as a potential extension of student loan programs beyond the current May 1 expiration could lower demand for refinance loans and put pressure on the growth of the company's consumer lending business.

The 2022 adjusted EPS estimate for Navient was reduced to $3.08 from $3.27. The 2023 and 2024 adjusted EPS estimates are $3.09 and $3.25, respectively.