Santander Consumer -5%; BTIG's Palmer defends

• Applauding the company's decision to adopt more disciplined underwriting standards in a highly competitive auto lending market, BTIG's Mark Palmer says Santander Consumer (SC -5.4%) is still paying for its more aggressive approach from the past.
• Its vintage 2015 loans were more heavily mixed to subprime borrowers, and much of this morning's miss can be attributed to higher-than-expected provisions - $686M vs. consensus $637M - related those loans.
• Reiterating his Buy rating and $17 price target (30% upside), Palmer acknowledges the challenges - balancing loan growth and credit quality, maximizing recoveries as used car prices fall, reviving Chrysler Capital volumes, finding a buyer for its personal lending portfolio - but says the stock price at 5.4x next year's expected EPS already reflects those issues.
• Previously: Credit trends a concern as Santander Consumer misses (Jan. 25)