BofA Lifts Ally Financial (ALLY) PT to $51 Fueled by $2B Share Buyback

Ally Financial Inc. (NYSE:ALLY) is one of the cheap stocks to buy for the next 3 years. On January 9, Bank of America raised the firm’s price target on Ally Financial to $51 from $42 and maintained a Buy rating on the shares. Although the firm acknowledged skepticism regarding the stock’s 14% premium over its pre-pandemic range, it remained bullish due to sustained price momentum. BofA pointed out that the stock’s outperformance against consumer finance peers since mid-November was largely driven by a $2 billion buyback authorization.

TD Cowen also raised the firm’s price target on Ally Financial, a day before the BofA rating, to $55 from $50 with a Buy rating. This adjustment reflects an updated outlook for the specialty finance sector, which is increasingly influenced by shifting macroeconomic factors and secular growth trends. The firm’s analysis highlights several key areas of the credit market expected to drive performance through 2026. These include consistent expansion in auto lending and credit cards, as well as the rising prominence of non-prime lending, student loans, and buy-now-pay-later services.

On the same day, UBS initiated coverage of Ally Financial Inc. (NYSE:ALLY) with a Buy rating and a $56 price target and suggested that the market is currently undervaluing the company’s trajectory for improving returns. UBS projected that Ally Financial’s ROTCE will trend toward 14% by 2027, with additional growth expected in subsequent years. This optimistic outlook is fueled by a combination of expanding net interest margins, steady improvements in credit losses, and the resumption of share repurchases.

Ally Financial Inc. (NYSE:ALLY) is a digital financial services company that provides various digital financial products and services in the US, Canada, and Bermuda.

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Disclosure: None. This article is originally published at Insider Monkey.