Discover price target raised to $168 from $127 at Citi

Citi analyst Arren Cyganovich raised the firm’s price target on Discover (DFS) to $168 from $127 and keeps a Buy rating on the shares. The analyst remains positive on the prospect of Capital One’s (COF) acquisition of Discover, but caveats that the deal approval by regulators “remains murky.” Vertically integrating Discover’s network with Capital One’s issuing business improves financial returns and strengthens its push work directly with merchants, the analyst tells investors in a research note. The firm says the scale benefits of adding Discover’s loans and deposits would make this deal attractive on its own, but the addition of a closed-loop networks creates new avenues for growth. Citi sees the risk/reward in favor of buying Discover shares here with more potential upside than downside. It believes the antitrust aspects should be approved, but says the bank regulatory approval will be heavily scrutinized. At a minimum Citi believes approval will likely move into 2025.