TD Cowen is moving off the sidelines when it comes to Ally Financial . Analyst Moshe Orenbuch upgraded the stock to buy from hold. Orenbuch also raised his price target to $50 per share from $43. His revised forecast implies that the stock could climb another 26% from here. Shares of Ally Financial have added 11% this year, making the company's valuation look "compelling" here, Orenbuch noted. The change comes after Ally reported third-quarter results that beat the Street. ALLY YTD mountain ALLY YTD chart Ally posted adjusted earnings of $1.15 per share, higher than the $1 analysts polled by FactSet had expected. The company's $2.2 billion revenue also beat the $2.11 billion estimate. Orenbuch pointed to these results as evidence that Ally can grow its return on tangible common equity next year. "We believe that ALLY has now shown that it has sufficient credit and margin strength to hit its mid-teens ROTCE target in the next two years and perhaps sooner," he wrote. ROTCE refers to return on tangible common equity, a profitability measure used on Wall Street. Orenbuch is also optimistic that credit will continue to improve after Ally tightened its underwriting in early 2023. By the end of the fourth quarter, the analyst believes that higher-quality 2024-2025 originations will make up 65% of the company's retail auto portfolio, while its "problematic" loans from 2022 will decline to around 10%. "We note that while the overall subprime industry is seeing worsening credit, there are many individual lenders who have seen improving results, including Capital One, and we believe that the steady performance of recent vintages will support improving credit in a relatively stable economic environment," he added. Orenbuch also pointed to expanding net interest margins as another catalyst for the stock. "We believe this [net interest margin] expansion is likely to continue through 2026, driven by the ongoing rate-easing cycle, gradual decline of funding costs, and continued replacement of lower-yielding back-book assets with higher-yielding new originations," he wrote. ( Learn the best 2026 strategies from inside the NYSE with Josh Brown and others at CNBC PRO Live. Tickets and info here . )
