Navient forecasts weak 2nd qtr and lowers estimates for 2015, sending stock lower aftermarket

Markets Associated Press

Loan servicing company Navient is cutting its expectations for the year because of weakened credit trends on some student loans and a drop in loans that are coming out of deferment.

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Its stock plunged $2.36, or 12.9 percent, to $16 in aftermarket trading.

Navient said Monday that some private student loans are "experiencing unfavorable credit trends" compared with loans in past years. Those loans were made to high-risk borrowers who went back to school during the recession and deferred repayment of their loans after graduating. Their deferments end in 2014. The company added that fewer loans are coming out of deferment in 2015 than in the last three years.

The Wilmington, Delaware-based company also lowered its forecast for net interest income because prices for private education loan portfolios are high. As a result, Navient may not buy as many loans as it had expected.

Navient Corp. is a loan management, servicing and asset recovery company and doesn't make private student loans itself. It was spun off from Sallie Mae, or SLM Corp., in 2014. It held $28.1 billion in private education loans at the end of June.

Navient says it expects to report a profit of 47 cents per share in the second quarter, or 40 cents per share excluding one-time items. It's forecasting an adjustment profit of about $1.85 per share for the year, down from its previous estimate of $2.20 per share.

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Analysts are projecting a profit of 55 cents per share in the second quarter and $2.19 per share for the year, according to FactSet.

The company is scheduled to report its second-quarter results after the market closes on July 21.

Shares of Navient are down 15 percent in 2015 and closed at $18.36 on Monday.