Oppenheimer Maintains Outperform On Discover Financial Services; Reduces PT To $69

In a research report issued today, Oppenheimer analyst Chris Kotowski maintained an Outperform rating on Discover Financial Services (NYSE:DFS) and reduced his price target to $69 (from $73). The company reported 3Q14 EPS of $1.37 vs Oppenheimer’s $1.30 and consensus $1.34 estimates.

Kotowski wrote, “It was a clean beat, with expenses and charge-offs coming in a touch better than expected. Loan growth of +7.0% YoY was better than our +6.6% estimate, and the risk-adjusted returns in aggregate remain relatively stable. PPE was $1.36B, +6.6% YoY and above the 4Q average of $1.31B. ROE was 23% in 3Q14, in line with YTD profitability. The main negative in the report was the outlook for the 2015 efficiency ratio, which management indicated would be “modestly above the 38% target.” We had been slightly below 38%, and thus we trim our ’15 EPS estimate, and PT to $69 from $73. We continue to recommend DFS.”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Chris Kotowski has a total average return of 9.0% and a 65.9% success rate. Kotowski is ranked #517 out of 3337 analysts.

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