As previously reported, Morgan Stanley analyst Jeff Adelson upgraded Discover (DFS) to Overweight from Equal Weight with a price target of $133, up from $105 as a new analyst assumed primary coverage. Following Q4 reporting, the firm is incrementally more bullish on prospects of a softer credit landing and identifies Ally (ALLY) and Discover as two ways to play that theme. For Discover, the analyst sees credit deterioration slowing and a strong near-term catalyst path. However, the credit cycle is not yet over, as net charge offs are set to rise though 2024, adds the analyst, who maintains an In-Line rating on the Consumer Finance industry.
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