Green Dot Shares Cut To Neutral, 'Still More Questions Than Answers'

In a report published Friday, analysts at Compass Point downgraded

from Buy to Neutral. The price target was lowered from $22 to $18. Although the company posted better than expected results for Q1, its full year revenue guidance was muted. For Q1, the company reported its adjusted EPS well ahead of the estimates and the consensus, on higher than expected non-GAAP revenues. Green Dot also reported its strong adjusted revenue, GDV growth and adjusted EBITDA, driven in part by recent M&A. The company also lowered its revenue guidance for 2015 from $720-$780 million to $720-$740 million, driven by higher than earlier expected negative impact of weaker TPG revenue and the elimination of MoneyPak. The adjusted EBITDA and adjusted EPS guidance for the year was, however, maintained. According to Compass Point, it could be possible that the company "is being overly conservative and taking a page out of its 2014 playbook where it guided lower to start the year and followed it up with three consecutive earnings beats. However, we believe it is more likely that management's visibility is simply very limited at this point." In addition, the company's CFO, Grace Wang, who was appointed to the position in November 2013 is soon to transition to being an SVP for Corporate Finance/Business Intelligence. The SVP Mark Shifke, Corporate Strategy, has been appointed as the acting CFO till the company finds a permanent replacement. "While we continue to see value in the GDOT franchise and recognize the company's sizable excess capital position, management's lack of visibility into forward trends is concerning, organic growth deteriorated, the CFO has apparently been demoted, and the company's key contract renewal with

remains looming on the horizon," the analysts added.