Bank of America Merrill Lynch Maintains Buy on Discover Financial Services

Bank of America Merrill Lynch is out with its report today on Discover Financial Services DFS, maintaining Buy. In a note to clients, Bank of America Merrill Lynch writes, "Capital generation should remain robust, in our view, with stable margins and improving credit. That said, DFS appears willing to consider potential acquisitions to grow, which would accelerate top-line growth at the expense of buybacks. In either case, we expect EPS lift as DFS recycles capital into balance sheet growth or repurchases. The combination of the two would likely support EPS growth and the valuation multiple on DFS shares." Bank of America Merrill Lynch maintains a $26 PO on DFS. Shares of DFS closed Wednesday at $22.95, down 0.99% from Tuesday's close.