3 Reasons Why Citi Upgraded Green Dot To Buy

Green Dot Corporation GDOT is a provider of reloadable prepaid debit cards and cash reload processing services and the stock has risen more than 120 percent over the past year, but at least one analyst sees the potential for continued upside ahead

The Analyst

Citi's Andrew Schmidt assumed coverage of Green Dot's stock with a Buy rating and $68 price target (prior rating was Neutral with a $66 price target).

The Thesis

Green Dot offers consumers an "increasingly wide range" of financial services and products to both businesses and consumers, Schmidt said in a note. As such, it boasts three factors working in its favor to support further growth, including improvements in the core re-loadable prepaid card business, an expansion to address B2B and B2C payments needs that should see strong secular growth, and utilization of assets as a "Banking as a Service" platform which would include new services at scale, for example Apple Pay Cash.

Green Dot's stock is trading at 17 times the analyst's 2019 earnings per share estimate, which implies a "favorable" risk to reward profile given the company's potential to grow its EPS at a mid-teens or better rate, the analyst also said.