On Friday, Discover Financial Services (NYSE:DFS) shares received an updated price target from Jefferies, a financial services company. The price target for the credit card issuer and digital banking corporation was raised to $145.00 from the previous $137.00, while the firm maintained a Buy rating.
The adjustment follows Discover Financial's reported earnings, which surpassed expectations. The company's earnings per share, excluding one-time charges, were $3.53, notably higher than the consensus estimate of $3.01. This outperformance was attributed to better-than-anticipated pre-provision net revenue (PPNR), net interest margin (NIM), and operating expenses.
The analyst noted improvements in delinquency rates, suggesting that peak charge-offs are expected to occur within the current year. This trend is seen as a positive indicator for the company's credit outlook.
In response to these results, Discover Financial has also raised its full-year 2024 guidance for net charge-offs (NCOs), loan growth, and net interest margin. The improved guidance is partly due to more favorable online savings account (OSA) deposit pricing.
The firm further explained that year-over-year changes in delinquency rates reinforce the belief that net charge-offs will peak this year. This assessment bolsters confidence in an anticipated improvement in credit quality for 2025. The revised price target and maintained Buy rating reflect Jefferies' positive outlook on Discover Financial's financial performance and credit health moving forward.
InvestingPro Insights
Following the positive reassessment by Jefferies, Discover Financial Services (NYSE:DFS) has also shown promising signs in its financial metrics and market performance. With a robust Market Cap of $31.14B and an attractive P/E Ratio standing at 11.01, the company's financial health is noteworthy. The adjusted P/E Ratio for the last twelve months as of Q1 2024 is 13.54, indicating a reasonable valuation given the company's earnings. Importantly, Discover Financial Services has demonstrated a strong return over the last three months, with a total return of 28.4%, and an even more impressive six-month total return of 48.94%, reflecting investor confidence in the company's growth trajectory.
InvestingPro Tips highlight that management has been aggressively buying back shares, which is often a signal of confidence in the company's future performance. Additionally, Discover Financial has raised its dividend for 13 consecutive years, showcasing a commitment to returning value to shareholders. The company's ability to maintain dividend payments for 18 consecutive years further solidifies its reputation as a reliable income stock. For readers interested in further analysis and tips, there are 5 additional InvestingPro Tips available for Discover Financial Services at https://www.investing.com/pro/DFS.
To gain deeper insights and unlock more InvestingPro Tips, interested investors can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. This promotion enhances the value proposition for users looking to leverage professional-grade financial tools and data for informed decision-making.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.