Green Dot Has 24% Upside As It Pivots From Prepaid Market To Full-Fledged Fintech

Joseph Vafi of Loop Capital raised his price target on Green Dot Corporation GDOT from $33 to $41, citing its solid position in attractive prepaid market and evolution as a real fintech play.

“We see the Company as well positioned to grow its many emerging fin tech business in mobile banking, wage and payroll disbursement, tax refund processing and money transfer,” Vafi wrote in a note.

Conservative Guidance

Vafi said the company’s guidance for flat active cards outstanding in 2017 could be conservative given a loyal base post the MoneyPak issue, new product roll-outs during the second half of 2016, and attractive industry growth in prepaid.

The analyst, who has a Buy rating on shares, is also positive on Green Dot’s share buyback and the announcement that Jeff Osher of activist Harvest Capital would join as a strategic advisor.

Raising Estimates

Vafi sees potential for an upward bias to valuation over the next several years. The analyst also raised his 2017 adjusted EPS estimate to $1.94 from $1.90.

In addition, the analyst said there is scope for more operating leverage if the company cuts back-end processing costs and realizes UniRush synergies.

The revised price target of $41 represents a potential upside of about 24 percent from current levels.

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