Investing.com -- Shares in Navient Corp. (NASDAQ:NAVI) plunged nearly 14% in after-hours trading after the Delaware-based student loan management company said it anticipates posting second-quarter earnings below analysts' forecasts and has plans to cut its forward guidance for the remainder of the year.
Navient, which services more than $300 billion in student loans, estimates earnings per share of 0.40 for the second quarter and 1.85 for the remainder of the year. The forecasts are sharply below analysts' forecasts of 0.55 for the period and 2.19 per share for the rest of 2015. Although the company said the majority of its private education loan portfolio continues to perform as expected and is experiencing positive credit trends, a portion of its higher risk private education loan borrowers exited deferment status in 2014.
The high risk loans are experiencing unfavorable credit trends compared to loans that exited deferment in prior years, the company said in a statement. Furthermore, loan balances exiting deferment increased to $2.5 billion in 2014, compared with $1.8 billion in 2013 and $2.1 billion in 2012.
"The changes to our guidance reflect marketplace conditions for private loan portfolio purchases and cost of funds, as well as a conservative assessment of default trends for a small and declining segment of our private education loan portfolio," Navient CEO Jack Remondi said in a statement.
"While we have removed private education loan acquisitions from our guidance, we continue to believe that there will be opportunities for Navient to acquire loans in 2015 and beyond. Our restructuring initiative reflects changes post-separation to improve the operating efficiency and effectiveness of our organization, producing positive results for our customers and shareholders. Furthermore, we continue to see positive credit trends for new college graduates," Remondi added.
Navient shares fell 2.52 or 13.73% to $18.36 in after-hours trading.
Navient is scheduled to release its second quarter earnings on July 21 after the close of trading.