SLM Corp (NASDAQ: SLM) witnessed a notable uptick in its share price during after-hours trading after Wells Fargo upgraded its price target from $30.00 to $32.00, retaining an Overweight rating on the student loan provider. At the time of the update, SLM's shares were trading at $26.70, suggesting a valuation that appears attractive based on InvestingPro analysis due to its price-to-earnings ratio of 9.36 and a market value pegged at $5.42 billion.
The company posted strong fourth-quarter earnings per share (EPS) of $1.12, outperforming Wells Fargo’s projection of $1.01 and the consensus estimate of $0.94. This earnings outperformance was primarily driven by an unexpectedly large portfolio sale alongside reduced operating expenses. Over the past year, investing data confirms that SLM has maintained profitability with a return on equity standing at 31%, underscoring efficient capital use.
Fourth-quarter net revenues reached $454 million, slightly below Wells Fargo’s forecast of $458 million but marginally above the consensus figure of $442 million. The net interest margin (NIM) was recorded at 5.21%, trailing both the analyst estimate of 5.25% and the consensus of 5.30%, indicating some pressure on yield metrics.
Provisions for loan losses came in at a negative $19 million, notably better than the $15 million anticipated by Wells Fargo and well below the consensus estimate of $38 million. Wells Fargo highlighted that while credit metrics appear elevated, this was largely influenced by a strategic new partnership, described as a mechanical inflation of the figures.
Looking ahead, the analyst from Wells Fargo anticipates that SLM’s 2026 guidance will align with market expectations. Furthermore, the company’s preliminary outlook for 2027 suggests earnings per share growth in the high teens to low 20% range, signaling strong medium-term profitability prospects.
In related developments, SLM’s fourth-quarter fiscal 2025 results beat market expectations, delivering diluted EPS of $1.12 against forecasts of $0.94 and BofA Securities’ $0.91 target. Revenues also outpaced estimates, coming in at $454 million compared to an anticipated $442.73 million. Following these results, BofA Securities adjusted its price target for SLM Corp to $32.00 from a previous $35.00 while keeping a Buy rating, reflecting sustained investor confidence based on the company's financial performance.