What Happened?
Shares of student loan provider Sallie Mae (NASDAQ: SLM) jumped 3.9% in the morning session after the company reported fourth-quarter 2025 results that surpassed Wall Street expectations.
The company posted a GAAP profit of $1.12 per share, easily clearing analysts' consensus estimates of $0.94. Revenue also came in slightly ahead, reaching $454.1 million against an expected $449.7 million, marking a 16.4% increase from the same quarter last year. However, the report was not uniformly positive. Sallie Mae's net interest income of $377.1 million fell just short of forecasts. Additionally, the company's earnings guidance for the full year 2026 was set at $2.75 per share at the midpoint, which missed analyst estimates by 1%. Despite these weaker points, investors appeared to focus on the headline earnings and revenue beats.
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 biggest move we wrote about over the last year was about 2 months ago when the stock dropped 16.4% on the news that multiple analysts downgraded the stock, citing concerns about a higher expense outlook.
Morgan Stanley lowered its rating on the student loan company from 'Overweight' to 'Equalweight' and cut its price target. The change came after Sallie Mae presented a scenario that showed potentially higher-than-expected expenses in 2026 and 2027 as it prepared for new loan opportunities and potential government changes. Due to this outlook, Morgan Stanley reduced its earnings per share estimates for those years. Adding to the pressure, Compass Point also downgraded the stock more severely, from 'Buy' to 'Sell,' and significantly lowered its price target from $35.00 to $23.00.
Sallie Mae is flat since the beginning of the year, and at $27.42 per share, it is trading 20.3% 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 $2,092.
The 1999 book Gorilla Game predicted Microsoft and Apple would dominate tech before it happened. Its thesis? Identify the platform winners early. Today, enterprise software companies embedding generative AI are becoming the new gorillas. Click here for access to our special report that reveals one profitable leader already riding this wave, it’s free.
