BofA is “not surprised” to see Discover Financial shares selling off in aftermarket trading following the company’s “disappointing” Q4 earnings and 2024 guidance. There were “few bright spots” in Q4 results, which featured a negative surprise of a larger-than-expected reserve build and a higher reserve rate. However, the firm is maintaining its Buy rating on the shares as it argues that with the stock down 10% “much of the bad news is now reflected in valuation.” On the positive side, the rate of new delinquency formation is slowing and credit losses should peak in 2024, BofA contends.
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