Best Smidcap Ideas: +70% TAM, Credit Losses Stable, Buybacks Drive EPS Growth

Research evidence excerpt

Best Smidcap Ideas: +70% TAM, Credit Losses Stable, Buybacks Drive EPS Growth

TD Cowen Diversified Financials: Consumer Finance

Global Research

SLM Corp

TD SECURITIES (USA) LLC BEST SMIDCAP IDEAS 2026

Price: $22.39 (06/8/2026) Best Smidcap Ideas: +70% TAM, Credit Losses

Price Target: $32.00 Stable, Buybacks Drive EPS Growth

BUY (1)

ESG SCORE: 55/100

Moshe Orenbuch THE TD COWEN INSIGHT

646 562 1495

As federal PLUS loan originations are privatized July 1, SLM's TAM should expand meaningfully

moshe.orenbuch@tdsecurities.com

(~70%) after a ~3 year phase-in. The worst of the credit pressure appears to be behind us, with

Burç Okumuş trust early-stage and total DQs well below mid-2025 peaks & grad employment improving.

212 468 8443 We believe SLM estimates should rise, as higher loan sales and aggressive buybacks should

burc.okumus@tdsecurities.com

support EPS growth and ROE.

Key Data

Symbol NASDAQ: SLM Summary Of Our Thesis

Beta: 0.99

As the federal government stops originating Grad PLUS loans and caps Parent PLUS loans July

52-Week Range: $34.40-$18.74

1, the private student loan TAM is expected to expand from ~$14bn to ~$23-$24bn post phase-

Market Cap: $4.2B

in period. SLM should be the largest beneficiary, given its ~60% market share; we expect total

Net Debt (MM): $787.7 originations to rise 31% y/y in '2027 and 12% in 2028.

Cash/Share: $(1.68)

Dil. Shares Out (MM): 197.9 The company’s Q1 whole-loan sale at 6-7% margins should reinforce investor confidence in

Enterprise Value SLM’s ability to utilize capital-light channels, alongside its KKR forward-flow arrangement.

$5,469.2

(MM): We also believe the worst of the credit pressure is likely behind us, with early-stage DQs now

BV/Share: $11.59 running ~55 bps below the July 2025 peak and graduate employment improving y/y.