Jefferies Gets Even More Bullish on Discover Financial Following Credit Protection Products Settlement (DFS)

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Credit card issuer Discover Financial Services ( DFS ) on Monday caught some continued bullish sentiment from analysts at Jefferies & Co.

The firm maintained its "Buy" rating on DFS and lifted its price target from $40 to $45. That new target suggests a 17% upside to the stock's Friday closing price of $38.62.

A Jefferies analyst commented, "The CFPB/FDIC ruling is non-recurring and should remove a very modest overhang." On Friday, Discover announced a settlement with the CFPB & FDIC regarding credit protection products. The agreement includes some $200 million in customer refunds and a $14 million fine.

Continuing, the firm said "On a separate note, trends in credit recoveries and gross charge-offs lead us to conclude credit should continue to improve into at least through Q4'12. We expect recoveries on charged-off accounts to mean revert later than originally anticipated, providing slight upside to our current core EPS estimates."

Accordingly, Jefferies lifted its earnings estimates for the company through 2014.

Discover Financial shares were mostly flat in premarket trading Monday.

The Bottom Line
Shares of Discover Financial Reserves ( DFS ) have a 1.04% dividend yield, based on Friday's closing stock price of $38.62. The stock has technical support in the $34 price area. The shares are trading near all-time highs.

Discover Financial Services ( DFS ) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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