11:05 AM EDT, 09/30/2024 (MT Newswires) -- Navient ( NAVI ) holds a significant legacy portfolio of federal student loans and is expanding to the private student lending market with a focus on in-school loans and refinancing, BofA Securities said in a note on Monday.

"The new strategy comes with execution risk, which we believe is reflected in the stock price," according to the firm.

BofA said Navient's ( NAVI ) position in the in-school loan market is growing, but progress is slow due to competition, as the top six lenders control 75% of the market.

The company's standing as the number two student refinance lender in the US provides growth potential, especially if interest rates decline in 2025, which would benefit its refinancing business, the firm added.

The Federal Family Education Loan Program portfolio represents a large, amortizing part of Navient's ( NAVI ) holdings and pressures earnings but the predictable cash flow allows the company to repurchase shares and invest in its private lending segment, BofA said.

The firm initiated coverage of Navient ( NAVI ) with a neutral rating and a price objective of $17.

Price: 15.65, Change: +0.23, Percent Change: +1.46