Ally Financial heads into its May 6 earnings release with analysts firmly on the front foot — a rare unanimity of upward revisions that stands in contrast to a more cautious options market.
The analyst response to the last quarterly print was striking. Goldman Sachs raised its target to $56 from $50, maintaining Buy. Morgan Stanley lifted to $55 from $53 with an Overweight rating. Evercore ISI moved its target to $54 from $46. All three acted within days of the April 17 results, and all three kept positive ratings intact. The Street's mean target now sits at $54, implying roughly 24% upside to the current price of $43.41. The direction of travel is clear: the last print convinced analysts the recovery thesis is intact.
Options traders are not quite so relaxed. The put/call ratio has climbed to 1.19, running well above its 20-day average of 0.93 — about 1.8 standard deviations above the norm — signalling a meaningful lean toward downside protection into the release. That's not a panic reading; the 52-week high PCR is 1.71. But the shift has been abrupt. Through early-to-mid April, the PCR was running around 0.78. The defensive repositioning accelerated after the post-earnings gap higher, with the stock up more than 10% on April 17 before giving back roughly 2% on Friday.
Short interest tells the less alarming half of the story. Bears have been unwinding. Short interest as a percentage of free float has fallen from around 3.8% at the start of April to 3.4% now — a decline of roughly 11% over the month. The borrow market is extremely loose: availability is ample, cost to borrow has collapsed to 0.32% from a brief spike above 5% in early April, and the ORTEX short score of 36 ranks in the 43rd percentile — squarely mid-range. There is no squeeze dynamic building here.
The bull case rests on margin recovery in retail auto credit and the resilience of Ally's insurance line. The bear case centres on net financing revenue pressure and the ongoing shrinkage of the commercial auto book, down roughly 6% at the last count — a reminder that the auto lending cycle still carries real credit risk. Berkshire Hathaway holds 9.4% of shares and has not moved its stake since year-end; Wellington added over 2.3 million shares as recently as February, a notable accumulation from an active manager. With the stock up 11% over the past month yet still trading at under 8x earnings and 0.9x book, the May 6 print becomes a test of whether the credit quality improvements flagged in April were a durable turn or a single-quarter reprieve.
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