These Analysts Raise Their Forecasts On Discover Financial After Strong Q2 Earnings

Discover Financial Services DFS reported better-than-expected second-quarter earnings results, after the closing bell on Wednesday.

Discover reported GAAP earnings of $6.06 per share, beating the estimate of $3.07 per share, and quarterly Net Interest Income (NII) of $3.524 billion, according to data from Benzinga Pro.

Net interest income for the quarter increased by $347 million, or 11% year-over-year, driven by higher average receivables and net interest margin expansion. Net interest margin was 11.17%, up 11 basis points versus the prior year.

"Discover's fundamental operating performance remains very good, as shown by our loan growth, margin expansion and higher non-interest revenue in the quarter," said Michael Shepherd, Discover's Interim CEO and President. "Additionally, we advanced several critical initiatives including entering into an agreement to sell our student loan assets, favorably resolving litigation in our Payment Services segment, and entering into a class action settlement agreement for the card misclassification matter."

Discover's shares fell 0.2% to trade at $142.63 on Friday.

These analysts made changes to their price targets on Discover Financial following the announcement.

• BMO Capital analyst James Fotheringham maintained Discover Financial with a Market Perform rating, while raising the price target from $115 to $119.
• RBC Capital analyst Jon Arfstrom maintained the stock with a Sector Perform rating, while increasing the price target from $140 to $148.
• JP Morgan analyst Richard Shane maintained Discover Financial with a Neutral rating and boosted the price target from $132 to $135.

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