On Thursday, RBC Capital Markets adjusted its outlook on OneMain Holdings Inc. (NYSE:OMF), a leading financial services provider, by increasing its price target to $61 from the previous $55 while maintaining an Outperform rating on the company's shares. The firm acknowledged OneMain's performance in the first quarter of 2024, highlighting the company's lower-than-expected delinquency rates and robust capital generation.
The analyst pointed out that OneMain's first-quarter delinquencies for loans 30-89 days past due exhibited a better-than-seasonal trend, which was one of the standout features in the company's quarterly report. Additionally, the capital generation during the quarter surpassed expectations, contributing to the positive assessment.
OneMain's management has kept its strategic priorities and guidance outlook steady. RBC Capital's revised model takes into account slightly adjusted revenue yield assumptions but still anticipates that net charge-offs (NCOs) will reach their peak in the first half of 2024. The model also projects managed receivables growth in line with management's expectations.
OneMain, with its diverse range of financial products including personal loans, credit cards, and auto financing, aims to be the preferred lender for nonprime customers. RBC Capital expressed continued confidence in OneMain's durable business model and its potential for capital generation, which underpins the decision to maintain the Outperform rating and raise the price target to $61.
InvestingPro Insights
OneMain Holdings Inc. (NYSE:OMF) has been a company of interest for analysts and investors alike, particularly given its recent performance. In light of RBC Capital Markets' updated outlook, InvestingPro data reflects several key metrics that may be of interest. With a solid market capitalization of $6.08 billion and an attractive P/E ratio of 9.85, the company stands out in the financial sector. The company's dividend yield is particularly notable at 7.88%, which is substantial for shareholders seeking income in addition to growth.
InvestingPro Tips highlight OneMain's significant dividend payments and a strong return over the past year, with a remarkable 51.32% one-year price total return. Analysts have also predicted that the company will remain profitable this year, aligning with RBC Capital's positive stance on the company's future. Additionally, there's a large price uptick observed over the last six months, indicating a robust short-term performance.
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