We have upgraded our recommendation on SLM Corp. (SLM), better known as Sallie Mae, to Outperform from Neutral. The decision is based on Sallie Mae?s fourth quarter 2010 core earnings, which outpaced the Zacks Consensus Estimate, primarily attributable to the decrease in loan loss provisions and gains from repurchasing debt.
In January, Sallie Mae reported fourth quarter 2010 core earnings of 75 cents per share, marginally ahead of the Zacks Consensus Estimate of 72 cents. The results compare favorably with the prior-year quarter?s core earnings of 44 cents per share. During the quarter, the company repurchased $1.3 billion of debt with realized gains of $118 million.
On December 31, 2010, Sallie Mae successfully accomplished the acquisition of $26 billion in securitized federal student loan assets from The Student Loan Corporation, a Citigroup Inc. (C) subsidiary. The acquisition expands Sallie Mae?s customer base by about 1.3 million, and should support its
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