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UPDATE: Compass Point Downgrades NetSpend (NTSP) to 'Sell'; Not As Bad As Green Dot (GDOT)

August 3, 2012 12:24 PM EDT Send to a Friend
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Price: $15.98 --0%

Rating Summary:
    4 Buy, 15 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 21 | Down: 10 | New: 7
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(Updated - August 3, 2012 1:36 PM EDT)

Compass Point downgrades NetSpend (NASDAQ: NTSP) from Neutral to Sell, new price target of $5.00.

Analyst, Douglas Greiner, said, "Following 2Q12 earnings, we are cutting our next year's EV/FCF target multiple from 14x to 8x, which represents a premium to our most recently revised comparable Green Dot (Nasdaq: GDOT) target multiple of 5x. We question the sustainability of the company's current earnings power and the valuation the market currently gives it. Specifically, we believe the prepaid card offering is increasingly looking like a commodity. We see various risks related to competitive pressures over time."

"While NetSpend is not currently experiencing the same force of headwinds facing GDOT, being relatively better protected in terms of distribution channels, there remains enough uncertainty in our judgement to warrant a higher degree of conservatism built into our valuation methodology."

For an analyst ratings summary and ratings history on NetSpend click here. For more ratings news on NetSpend click here.

Shares of NetSpend closed at $8.27 yesterday.




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