Sunday, 3 March 2024

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‘Time to Hit Buy,’ Says Morgan Stanley About These 2 Financial Stocks – TipRanks Financial Blog

‘Time to Hit Buy,’ Says Morgan Stanley About These 2 Financial Stocks – TipRanks Financial Blog

Earlier this month, the January jobs numbers came in unexpectedly strong. According to the BLS report, 353,000 new positions were created during the month, surpassing forecasts by over 80%. This impressive performance adds another piece of economic good news to the pile.

That pile already includes a moderating trend in inflation, as the rate of price increases continues to slow down, and a continually increasing belief that the Federal Reserve will act to pare back interest rates later this year. Altogether, it’s been enough to keep economists happy and boost investor sentiment.

For Morgan Stanley analyst Betsy Graseck, these factors open up a series of opportunities, especially in financial stocks. Regarding two particular names, Graseck suggests that it’s ‘time to hit buy.’

We’ve opened up the TipRanks database to assess Wall Street’s opinion on Graseck’s picks. Let’s take a closer look.

Discover Financial Services (DFS)

The first stock we’ll look at is Discover Financial Services, best known as the issuer and backer of the Discover Card. This was the first credit card to come with a ‘cash back’ reward; you may remember its early TV commercials featuring the slogan ‘It pays to Discover…’ In addition to the cash back reward on all purchases, the Discover card had no annual fees for the cardholder. These perks for the customers helped push Discover Financial to a successful launch following the card’s 1985 introduction, and today the company has a $27 billion market cap and is one of the established credit card companies.

In addition to the several versions of the Discover card on offer, Discover Financial Services also makes available a wide-ranging set of financial and banking services. Customers can access checking, savings, and retirement accounts, and take out personal, home, or student loans. The company describes its mission as helping its customers spend smarter, manage debt better, and save more.

While Discover has a sound niche in the consumer credit market, the financial results for 4Q23 were considered disappointing. Specifically, the company’s $1.54 EPS was 93 cents per share below the forecast, and the company reported provisions for $1.91 billion in credit loss. The credit loss provision, essentially a company projection of future ‘bad loan’ damage, was well above the $1.66 billion that had been expected – and almost double the $883 million from 4Q22.

On a positive note,…

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