Will Analyst Focus on KKR Partnership Economics Change SLM's (SLM) Narrative and Risk-Reward Profile?

• In recent days, analysts including TD Cowen and Wells Fargo reiterated positive views on SLM, citing improving credit trends and growing confidence ahead of the company’s investor forum, where past updates have focused on its partnership with KKR and funding outlook.
• What stands out is that multiple firms now point to the KKR credit partnership’s economics and potential impact on loan origination as central to SLM’s longer-term earnings profile.
• Next, we’ll examine how clarity around the KKR partnership’s funding benefits could reshape SLM’s existing investment narrative and risk-reward balance.

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SLM Investment Narrative Recap

To own SLM, you need to believe its core private student loan franchise can convert policy tailwinds into steady earnings while keeping credit and funding risks in check. The latest analyst updates mainly reinforce the near term focus on credit normalization and the upcoming investor forum as the key catalyst, while highlighting that the biggest watchpoint remains whether alternative funding partnerships, particularly with KKR, deliver the economics needed to support targeted loan growth.

Wells Fargo’s decision to lift its price target to US$35 and reiterate an Overweight rating directly ties this story together, pointing to signs that delinquencies may have peaked and that more detail on the KKR credit partnership could clarify funding costs and origination capacity. How convincingly SLM explains the funding benefits and earnings contribution from these private credit structures will likely shape investor sentiment around both upside from policy driven volume and the risk that higher funding costs pressure returns.

Yet while optimism is building around the KKR partnership, investors should be aware that SLM’s ability to fund future loan growth still hinges on...

Read the full narrative on SLM (it's free!)

SLM's narrative projects $2.0 billion revenue and $918.9 million earnings by 2028.

Uncover how SLM's forecasts yield a $34.73 fair value, a 13% upside to its current price.

Exploring Other Perspectives

Two fair value estimates from the Simply Wall St Community span about US$34.73 to US$57.92, showing how far apart individual views can be. When you set those against the current focus on whether new private credit funding, such as the KKR partnership, can truly support higher originations without eroding margins, it underlines why you may want to compare several perspectives before forming your own view.

Explore 2 other fair value estimates on SLM - why the stock might be worth as much as 89% more than the current price!

Build Your Own SLM Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your SLM research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.
• Our free SLM research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate SLM's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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