Truist Securities Starts Discover Financial (DFS) at Buy

Truist Securities analyst Brian Foran initiates coverage on Discover Financial (NYSE: DFS) with a Buy rating and a price target of $233.00.

The analyst comments "We are Buy on Discover. While various post-election chatter seem to suggest that the Capital One deal may get approved in the next months, we believe that Discover has the bones to deliver strong ROTCE and TBV accretion even on a standalone basis. With the misclassification settlement and statements re-stating behind them and student loan sale nearly complete, we believe Discover is well-positioned to grow ROTCE back to its 20%+ historical levels, by way of large pent up capital optionality, reserve release, peer-leading delinquencies improvement and deposit pricing power. Discover is a $44bn market cap / $152bn asset card issuer, network operator, and online bank. Its portfolio is mostly credit cards, with the remaining (~15%) being student loans and personal installment loans. Recently, the Company announced that it has sold of most of its underperforming student loan portfolio to Carlyle and KKR, and that it has settled a class action lawsuit related to a card misclassification issue disclosed last year, for $1.2bn (with some historical financial statements restating related to this)—all what many see as final loose tied up ahead of deal approval. "

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 $176.06 yesterday.

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