Discover downgraded to Neutral from Overweight at Piper Sandler

Piper Sandler analyst Kevin Barker downgraded Discover Financial Services to Neutral from Overweight with a price target of $112, down from $130. The company unveiled a “misclassification” issue with the fees charged to merchants dating back to 2007 and subsequently took a $365M charge in Q2, the analyst tells investors in a research note. The firm says there are a “series of negative comps developing” for Discover, including charge-offs continuing to increase well above pre-pandemic levels, slowing loan growth due to lower sales volume, and increasing competition for deposits impacting net interest margin.