Deutsche Banks Says Wal-Mart Is A Drag On Green Dot, Shares Spike Anyway

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Deutsche Bank reported on Green Dot Corporation GDOT 3Q earnings Friday and maintained a Hold rating and $21 price target.

The firm claimed that Wal-Mart WMT “continues to drag down growth.”

“GDOT’s 3Q14 EPS of $0.36 beat our estimate of $0.34 while the revenues of $146.8m missed our estimate of $150.5m,” according to analyst Ashish Sabadra.

Sabadra noted that Walmart “revenues declined ~13 percent Y/Y from 63 percent of 3Q13 revenues to 52 percent due to lower fees (lowered pricing and usage of fee waiver products) and possibly a decline in active MoneyCard users.”

Analyst Michael Tarken with Compass Point rated the company a Buy and also noted that “Walmart's concentration has now declined for seven straight quarters and is at the lowest levels in Green Dot's history as a public company.”

Sabadra concluded that “despite maturation of product and distribution launched in late 2013, all operating metrics decelerated in the quarter which GDOT blamed on seasonality and tougher comps. Given the solid beat and margin expansion, we are raising our FY14 EPS by $0.06 to $1.35 (above the guidance of $1.29 - $1.33) and FY15 EPS by $0.08 to $1.84.”

In spite of the Deutsche Bank Hold rating, Green Dot shares surged higher Friday and recently traded at $23.75, up 7.13 percent.

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Posted In: Price TargetReiterationAnalyst RatingsAshish SabadraCompass PointDeutsche BankMichael Tarken
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