After Alliance Data's (ADS) stock dropped on Friday, SunTrust analyst Andrew Jeffrey blames the decline on Synchrony's (SYF) Q1 results which he views as "disappointing" and "highlighted by a sharp and unexpected reserve build." However, the analyst counters that " Alliance's losses have tended to lead Synchrony's higher." Moreover, he says that the credit quality of Alliance's portfolio is better than that of Synchrony and does not have as many short-term loans. He adds that data indicates that Alliance's credit outlook is improving. He keeps a $310 price target and a Buy rating on Alliance. ,

BMO Capital analyst James Fotheringham raised the firm's price target on Synchrony to $41 from $40 and keeps a Market Perform rating on the shares after its Q1 earings beat. The company's lower-than-previously modeled RSA payments more than offset higher expected credit and operating costs, the analyst tells investors in a research note.

Says receivables growth consistent with expectations, payment rate slightly lower than expectations and purchase volume below expectations. Says net interest income growth higher than expectations due to lower than expected payment rate and lower than expected deposit betas. Says credit, RSA and other expense largely in-line with expectations. Says expects typical seasonality in purchase volume, loan receivables, net interest income and in credit performance. Says expects net charge-offs to peak mid-year. Says expects reserve coverage at year-end to be lower than '23 year-end rate. Says expects RSA to align to program performance and function as designed. Comments taken from Q1 earnings conference call.

Reports Q1 revenue $4.8B, consensus $4.45B. Reports Q1 CET1 capital ratio 12.6%. Reports Q1 net charge-offs 6.31%. "Synchrony's first quarter performance highlights the resiliency of our business model and focus on delivering sustainable, strong results for each of our stakeholders," said Brian Doubles, Synchrony's President and Chief Executive Officer.