Stephens analyst Vincent Caintic upgraded Synchrony Financial (SYF) to Overweight from Equal Weight with an unchanged price target of $40. The analyst is a buyer of the shares on the 10% drop post the company's Q4 results. The market "misunderstood" Synchrony following its earnings, Caintic tells investors in a research note. He believes he market should not paint Synchrony "with the same negative brush" that faced Discover Financial (DFS), namely on negative expenses and loan growth. Synchrony has already won several retail partnership deals and ramp-up expenses are a natural result, contends Caintic. He sees a catalyst in the second half of 2020 when these partnerships generate revenues to drive earnings higher via loan growth and operating leverage

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.