Discover Financial (DFS) PT Lowered to $126 at BMO Capital

BMO Capital analyst James Fotheringham lowered the price target on Discover Financial (NYSE: DFS) to $126.00 (from $127.00) while maintaining a Market Perform rating.

The analyst commented, "Following DFS’s 3Q21 small miss versus consensus, we lower out-year estimates by up to 3% (slower loan growth; higher marketing costs), and we lower our target price to $126 (from $127). DFS reiterated full-year guidance despite a marginally more bearish economic outlook. Management expects loan growth headwinds to persist until payment rates normalize (“don't think that will happen until 2023”), along with higher marketing costs in part from “intensifying competition”. DFS shares re-rated with economic recovery but look fully valued; among U.S. FIG, we prefer asset managers (APO and KKR)."

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