UPDATE: Citi Color On DFS Q1 Preview

Citi, which raised its PT on shares of Discover Financial Services DFS, is providing some color on the stock.

“We are raising our Q1 est to $0.60 (ex any one-time STU deal exp) to reflect better credit (consensus is $0.51),” Citi writes. “And we believe core Q1 EPS has risk to the upside on a better reserve release. Key themes to watch include loan growth outlook, yields, STU impact and card network initiatives. DFS reports earnings on Mar 22rd and has their investor day on Mar 23th.

“At the investor day, we expect a bullish tone from mgt, with a detailed discussion on student lending. We wouldn't be surprised to see mgt raise the normalized ROA guidance ~50 bps from their previous 2.5-3% range to reflect lower normalized credit losses potentially offset by higher marketing.”

Discover Financial Services closed Thursday at $21.62.