UPDATE: Compass Point Upgrades Green Dot to Buy on 1Q13 Earnings Beat

In a report published Wednesday, Compass Point analyst Douglas Greiner upgraded the rating on Green Dot Corporation GDOT from Neutral to Buy, and raised the price target from $15.00 to $20.00. In the report, Greiner noted, “Green Dot reported a 1Q'13 earnings beat. Walmart linked revenue increased 11% from the prior year quarter following 14% growth reported in 4Q'12 -- despite facing competition from American Express in each quarter. Non-GAAP revenue increased 8% from a year ago setting a new high water market -- despite several adverse headwinds. The recent revenue strength suggests that Green Dot's business model is not be derailed by increasing competition. Given (1) this recent revenue strength in addition to (2) potential takeout value and (3) the balance sheet -- we upgrade our rating to Buy. While Green Dot's distressed valuation has meaningfully corrected over the past 10 months, the shares still screen cheap at 8.6x our estimate of this year's EPS excluding unencumbered cash and at 9.4x our estimate of this year's free cash flow adjusted for unencumbered cash.” Green Dot Corporation closed on Tuesday at $15.71.