UPDATE: Jefferies Raises PT on Discover Financial Services on Higher Buyback
In a report published Friday, Jefferies analyst Daniel Furtado reiterated a Buy rating on Discover Financial Services (NYSE: DFS), and raised the price target from $45.00 to $49.00.
In the report, Furtado noted, “Discover's capital plan came in well above street expectations with a $2.4B share repurchase program and a 20c quarterly dividend. The street was looking for only $1.6B in repurchases and we were looking for $1.9B, while both JEF and street expectations for the dividend were at 15c. Although the buyback is higher than last year's approval, we note that DFS didn't fully execute their 2012 authorization of $2B, which had approximately $600M remaining as of 3/14. We're updating our numbers here to account for higher expected NIM of 9.2% in FY'13 (per investor day), total buybacks of $2.1B in FY'13, and lower credit costs in both 2013 and 2014. We are also increasing our price target from $45 to $49, which is 10.5x our NTM EPS.”
Discover Financial Services closed on Thursday at $42.85.
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