In a report published Friday, Compass Point analyst Michael Tarkan reiterated a Buy rating on Green Dot (NYSE: GDOT), but lowered the price target from $28.00 to $25.00.
In the report, Compass Point noted, “We are maintaining our Buy rating on GDOT shares and raising our 2014 and 2015 adjusted EPS estimates to $1.30 and $1.55, respectively, from $1.25 and $1.45, after the company reported better-than-expected 1Q14 earnings. That said, we are lowering our price target to $25, from $28, after a recent uptick in competitor activity, and as we approach the key Walmart (WMT-NC) contract renewal in May 2015, we expect valuation to remain relatively muted.
"Despite the lower target, we continue to view GDOT shares as attractive at current levels as growth and margin expectations have become more rational, the franchise is poised to benefit from significant distribution expansion, management may step up capital returns, and the company has unique scarcity value and takeout potential.”
Green Dot closed on Thursday at $17.63.
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