11:21 AM EDT, 09/25/2024 (MT Newswires) -- Sallie Mae's (SLM) connections with about 2,100 student financial aid offices at four-year institutions support its dominant position in the private student loan sector, BofA Securities said in a note Wednesday.

BofA said Sallie Mae's market position, with more than fifty percent market share, business structure with a robust credit history, and potential for capital gains make it an appealing investment.

The company originated $6.4 billion in loans last year, and is positioned for market share gains, particularly as competitors exit the space, the firm added.

BofA said Sallie Mae's loan sale arbitrage strategy has boosted its return on equity and improved balance sheet efficiency to enable substantial capital returns, with the company repurchasing 51% of its outstanding shares since 2020.

The company's credit profile stays strong despite the weakening of the broader economy due to a large share of subprime borrowers and low unemployment rates among college-educated individuals, according to the note.

The firm initiated coverage of the company's stock with a buy rating and a price objective of $27.

Sallie Mae's shares were up nearly 2% in recent trading.

Price: 21.94, Change: +0.41, Percent Change: +1.90