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FBR Capital Upgrades Discover Financial (DFS) to Outperform

March 13, 2013 8:20 AM EDT Send to a Friend
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Price: $65.30 -0.44%

Rating Summary:
    17 Buy, 5 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 13 | Down: 24 | New: 21
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FBR Capital upgraded Discover Financial (NYSE: DFS) from Market Perform to Outperform with a price target of $48.00 (from $42.00) reflecting increased FY13 and FY14 EPS estimates driven by higher receivables growth, better NIM, and lower credit costs.

FY13 EPS estimate increases from $4.17 to $4.69 (consensus = $4.38), and they increase our FY14 EPS estimate from $4.11 to $4.60 (consensus = $4.56).

The firm is positive on metrics of the Discover It card. "Our downgrade in December reflected our concern that marketing expenses associated with the Discover It card would outstrip revenue benefits from receivables growth; however, the product is experiencing greater receivables growth than we expected. Although not expected to have a material financial impact (the payment services segment accounts for 4%-5% of EPS), management noted that PULSE's volume growth rate is slowing due to competition."

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

Shares of Discover Financial closed at $42.13 yesterday.




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Analyst EPS Change, Analyst PT Change, Upgrades

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