We are initiating coverage on Ally Financial ALLY with a fair value estimate of $39 per share and assign a no-moat rating, High Uncertainty rating, and a Standard Capital Allocation rating. We see the shares as materially undervalued at the current price, though we caution investors that 2023 will likely be a challenging year for Ally as it faces higher credit costs and lower origination volume. That said, on a full-cycle basis, we believe the business is on a better footing than it was prior to 2020, and we expect higher returns once the current credit cycle has passed.