Barclays Upgrades Synchrony Financial On Competitive Positioning And Buybacks

In a report published Thursday, Barclays analyst Mark C. DeVries upgraded the rating on Synchrony Financial (NYSE: SYF) from Equal-Weight to Overweight, while raising the price target from $30 to $38, based on the company's robust competitive positioning and share buybacks.

"After careful analysis, we think that private label issuers are the most insulated from adverse impacts to the credit card business model and should benefit most from growing retailer power," DeVries explained.

Given that Synchrony Financial is the largest private label issuer, the analyst expects the company to benefit from this trend. "We are incrementally positive on SYF's ability to sustain mid- to high single digit growth in credit card loans," the Barclays report said.

In addition, the analyst believes that the company's share buyback programs would act as positive catalysts to the stock. The analyst also believes that the Street estimates for the buybacks could prove too conservative, in terms of both timing and amount.

"In total, we see significantly more upside to earnings from better-than-expected buybacks than downside risk," DeVries stated, adding, "Our base case expectation is that SYF's first full year of buybacks will occur in 2017."