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Green Dot climbs as analyst raises rating

NEW YORK (AP) -- Shares of Green Dot bounced off of three-month lows Tuesday with Piper Jaffray suggesting that concerns over rising competition may be unfair.

THE SPARK: Analyst Michael Grondahl lifted his rating on Green Dot Corp. to "Overweight" from "Neutral."

THE BACKGROUND: There has been some chatter about big players entering the market and how that would affect companies like Green Dot.

Nearly two weeks ago a Janney Capital Markets citing that threat downgraded the Monrovia, Calif., company, which markets prepaid debit cards and related services at retail locations and online.

Green Dot's Walmart MoneyCard has a reload fee and a monthly maintenance fee. The company also has a bank subsidiary called Green Dot Bank.

Janney pointed in particular to deep-pocketed American Express Co., which has its own reloadable prepaid card called Serve, as well as new competition from drug and grocery stores that have reloadable prepaid cards linked to their existing loyalty programs, like the Walgreen Balance card.

Shares have been sliding since late September, when shares were trading for almost 19 percent more than they were Tuesday.

Share move into positive territory Tuesday, only the 7th time that has happened in the past 30 days.

THE ANALYSIS: Piper Jaffray said Tuesday that concerns about Serve and Walgreen's private label products seem overdone, as Walmart appears to be expanding its relationship with Green Dot by offering a bigger selection of cards instead of making Green Dot reduce reloading fees.

Green Dot reports third-quarter results on Thursday.

SHARE ACTION: Up $1.48, or 7.4 percent, to $21.48 in midday trading. The stock is up 64 percent for the year to date.