What Happened?
Shares of student loan provider Sallie Mae (NASDAQ: SLM) fell 1.4% in the afternoon session after an analyst at Morgan Stanley lowered the price target on the stock.
Jeffery Harte, the analyst, adjusted the price target down from $40 to $37, though the "Overweight" rating on the shares remained the same. A lower price target, even without a rating change, can signal reduced expectations for a stock's future performance.
Adding to the negative mood, the federal government appeared to be heading for a shutdown. This event had the potential to affect millions of student loan borrowers, creating uncertainty for companies operating in that market.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Sallie Mae? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Sallie Mae’s shares are not very volatile and have only had 7 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 21 days ago when the stock dropped 3.7% on the news that a government report showed significantly weaker job growth over the past year than initially reported, fueling concerns about the health of the economy.
The Bureau of Labor Statistics announced a preliminary annual revision indicating that the U.S. economy created 911,000 fewer jobs in the 12 months ending March 2025 than previously stated. This significant downward adjustment means the economy added only about half the number of jobs initially reported during that period. While the revision is a routine process and doesn't reflect current conditions, it has amplified fears of a faltering labor market.
Compounding these concerns, a recent Federal Reserve Bank of New York poll revealed that workers' confidence in finding a new job has fallen to its lowest level since the survey began in 2013, raising fears of a potential recession.
JPMorgan Chase CEO Jamie Dimon added that the U.S. economy is "weakening," though he stopped short of predicting a recession. "Whether it's on the way to recession or just weakening, I don't know," he said. Dimon's remarks are closely watched, given his influence as head of one of the nation's largest banks.
Sallie Mae is flat since the beginning of the year, and at $27.55 per share, it is trading 19.9% below its 52-week high of $34.40 from July 2025. Investors who bought $1,000 worth of Sallie Mae’s shares 5 years ago would now be looking at an investment worth $3,405.
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