Truist Securities on Monday reduced its price target for Ally Financial (NYSE:ALLY) to $50.00 from $51.00 and maintained a Buy recommendation on the financial services firm. At the time of the note, Ally was trading at $41.60, and InvestingPro data indicated the stock was below its Fair Value, implying potential upside.
The broker described Ally's margin guidance as "disappointing" and flagged charge-off guidance as an additional source of concern. Truist's research highlighted that margin compression in the fourth quarter and into the first quarter was more affected by lease termination losses than previously appreciated. The firm characterized those lease-related losses as possibly temporary and concentrated in a small portion of Ally's portfolio.
Despite the near-term pressure, Truist expressed a view that margins could recover by the second quarter as the bank's online savings and certificate of deposit portfolios reprice, a shift that could reverse the recent margin weakness. The research note nevertheless used the word "frustrating" to describe the stock's recent performance while pointing out valuation metrics that support analyst optimism.
Specifically, Truist observed that Ally was trading at roughly one times tangible book value. The firm projected tangible book value to rise from about $40 to a range between $45 and $50 over the next 18 months, driven by earnings and the potential recapture of accumulated other comprehensive income, or AOCI.
In separate reported details on company results, Ally posted fourth-quarter 2025 adjusted earnings per share of $1.09, topping Wall Street expectations of $1.03. The earnings beat was attributed mainly to stronger other revenue, which offset a slight decline in net interest income.
Looking ahead, Ally provided guidance for a net interest margin of 3.6 to 3.7 percent for the coming year, a touch below the consensus estimate of 3.74 percent. For retail auto credit performance, the company projected net charge-offs in the 1.8 to 2.0 percent range, a small improvement from the prior year level of 1.97 percent.
On the analyst front, reporting included that Truist Securities maintained its Buy rating and, in another referenced note, was listed with a price target of $51.00. TD Cowen was also cited as reiterating a Buy recommendation and setting a higher price target of $55.00. These analyst stances suggest continued confidence among some research teams despite investor unease about guidance and near-term market dynamics.
Summary
Truist reduced its Ally Financial price target to $50 from $51 while keeping a Buy rating, pointing to unexpectedly heavy lease termination losses that pressured margins in late 2025 and early 2026. Ally beat fourth-quarter earnings estimates but guided to a slightly softer net interest margin and only marginal improvement in retail auto net charge-offs. Analysts nonetheless note the stock trades at about one times tangible book and forecast tangible book value growth over the next 18 months.
Key points
- Truist lowered its Ally price target to $50 from $51 and retained a Buy rating; Ally was trading at $41.60 and beneath its Fair Value per InvestingPro data.
- Margin guidance was called "disappointing," with lease termination losses cited as a larger driver of Q4 and Q1 margin pressure than previously understood; repricing of online deposits could improve margins by Q2.
- Ally beat Q4 2025 EPS estimates at $1.09 but guided to a 3.6-3.7% net interest margin and retail auto net charge-offs of 1.8-2.0%.
Risks and uncertainties
- Persisting margin pressure if lease termination losses or other concentrated portfolio issues continue to affect results - impacts banking and consumer finance sectors.
- Charge-off guidance could prove higher than expected if credit trends deteriorate, affecting auto finance lenders and consumer credit markets.
- Net interest margin guidance below consensus creates earnings downside risk if NIM does not recover as anticipated - relevant to investors focused on banking sector interest rate sensitivity.
Analyst and market context
While some inconsistencies appear in the reporting of precise price target figures within the compiled notes, the consistent themes are a modest haircut to price expectations, continued Buy ratings from multiple brokers, and an analyst view that tangible book value provides a potential valuation floor.