The outlook for Ally Financial is more uncertain in 2023, according to Barclays. Analyst Jason Goldberg downgraded shares of Ally to equal weight from overweight, saying the bank is more vulnerable to a downshift in the economy. “This year is likely to witness the end of the Fed tightening cycle and loan loss normalization,” Goldberg wrote in a Tuesday note. “As such, we are becoming less constructive on those with outsized asset sensitivity and areas we believe loan losses will adjust the fastest – namely, lower-end consumer (most impacted by much reduced stimulus, elevated inflation, and higher interest rates) and commercial real estate (uncertainties in office, retail, health care segments),” Goldberg added. Banks are starting the new year with several advantages and disadvantages. While they are generally well positioned to weather economic shocks, they’re also dealing with an uncertain macro that could mean higher credit losses and slowing loan growth. Ally shares had their worst year on record in 2022, dropping 48.7%. The analyst lowered his price target to $33, down from $40, which implies nearly 35% upside from Friday’s closing price. “While ALLY should still be able to achieve a core ROTCE in the mid-double digits range over time, results in the near-term will likely be pressured due to the impacts of higher rates partially offset by continued loan growth,” Goldberg wrote. In addition to Ally, the analyst downgraded shares of Capital One Financial to equal weight from overweight, saying that the two stocks are the “most exposed banks we cover to the lower-end consumer.” —CNBC’s Michael Bloom contributed to this report.
