On Thursday, Keefe, Bruyette & Woods maintained their Outperform rating and $145.00 price target for Discover Financial (NYSE:DFS). The firm adjusted its earnings per share (EPS) estimates for the financial services company following the first-quarter results of 2024. The EPS estimates for 2024 have been revised to $9.42 from the previous $11.31, and for 2025 to $12.17 from $13.53.
The revision of EPS estimates comes after Discover Financial reported a miss in the first quarter due to a one-time reserve connected to a merchant card misclassification issue. Additionally, the estimates account for the anticipated impact of the Consumer Financial Protection Bureau's (CFPB) credit card late fee rule, which is assumed to be implemented starting October 1st.
Despite the lowered EPS forecasts, Keefe, Bruyette & Woods expresses confidence that Discover Financial will be able to mitigate the effects of the CFPB rule over time. The firm's stance remains positive, with an unchanged price target of $145, indicating a belief in the company's capacity to recover and adapt to the regulatory changes.
The CFPB's new rule on credit card late fees is expected to affect the industry, and Discover Financial's proactive measures to address this potential challenge are being closely monitored by analysts and investors alike. The firm's outlook suggests that Discover Financial's strategies may help cushion the impact of the new regulations on its financial performance.
Investors and market watchers will continue to observe how Discover Financial navigates the changing regulatory landscape and its influence on the company's financial outcomes. The maintained Outperform rating and price target signal a positive expectation for the company's stock performance in the face of these adjustments.
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