Ally Financial (ALLY) Q1 outperformance was driven by a reserve release stemming from stronger-than-expected credit performance, which offset the negative impact from a weakening macroeconomic outlook, Deutsche Bank Research said in a note on Monday.
The company reported adjusted earnings per share of $0.58, exceeding both consensus estimates of $0.43 and Deutsche Bank's expectation of $0.29.
The firm said that while net charge-offs in Ally's Retail Auto portfolio are trending toward the low end of the company's 2025 guidance range of 2% to 2.25%, management chose to maintain the full-year guidance due to ongoing uncertainty in the macroeconomic environment.
Deutsche Bank raised its full-year 2025 EPS estimate modestly to $3.50 to reflect the first-quarter beat and said that potential US tariffs, if enacted, pose downside risk to earnings, while limited upside remains if they are not implemented.
The firm reiterated its buy rating on Ally's stock with a $53 price target.
Price: 30.63, Change: -1.01, Percent Change: -3.18
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