Sterne Agee Rates Discover Financial Services Buy (DFS)

Discover Financial Services DFS reported 3Q10 EPS of $0.47 vs. operating results of $0.51 in the year ago period. Excluding $0.02 per share in investment gains, operating results of $0.45 were about Sterne Agees's estimates of $0.47. According to Sterne Agee, most of the stronger quarter was tied to improved credit metrics, which positively impacted both interest income and provision levels. Sterne Agee also increased estimates from $0.95 to $1.10 to reflect the stronger quarter and an increase on our 4Q10 EPS estimate. Sterne Agee's Rating: BUY Price Target: $20.00