RBC Capital analyst Jason Arnold initiated Synchrony with an Outperform rating and a price target of $45. Arnold says the company is "poised for solid growth" based on his outlook for opportunity in the private label card space as well as the positive trends in the online/mobile spending category. Given the expected return on equity, the analyst believes that Synchrony's valuation of 9.7-times expected FY18 earnings is modest, forecasting a "more fair value" of 12-times with his price target.

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.