UPDATE: BMO Capital Downgrades Discover Financial (DFS) to Market Perform
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BMO Capital analyst James Fotheringham downgraded Discover Financial (NYSE: DFS) from Outperform to Market Perform with a price target of $105.00.
The analyst comments "After its impressive run, we downgrade DFS on valuation exclusively; P/E and P/TCE have doubled over the past year and are now at or above historical averages. Our $105 target implies low-single-digit upside, predicated on 2.3x pro forma TCE (normalized 25% RoTCE × 8x P/E) plus $30 per share excess capital (valued at 0.5x). This is not a call on the quarter, but our 1Q21E $2.64 estimate is below consensus on higher provisions. We prefer market-oriented asset managers (KKR, APO, BEN, and VCTR) and investment banks (MS and GS)."
Shares of Discover Financial closed at $102.00 yesterday.
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