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Ally Financial (NYSE:ALLY) stock perked up 2.3% in Monday morning trading after J.P. Morgan upgraded the auto lender to Neutral from Underweight as analyst Richard Shane thinks its credit, net interest margin and multiple trajectory “have been overly conservative.”
“As the impact of less profitable vintages wanes (2021 and 2022) and are replaced by higher yielding pools, risk-adjusted margins should steadily improve,” Shane wrote in a note to clients.
“Increased visibility on ALLY’s depository pricing power could become an important catalyst,” he added.
His Neutral rate differs from the SA Quant system rating and the average sell-side analyst rating, both at Buy.