Seaport Research downgraded Discover Financial Services (DFS) to Neutral from Buy without a price target. The company’s credit trends in February on the card portfolio showed additional signs that delinquency formations may be peaking, although charge-off trends were above expectations, the analyst tells investors in a research note. The firm says Discover’s credit card portfolio growth slowed to 11.5% year-over-year in February from 12.2% in January, and a peak growth rate of 22.6% in February 2023. The downgrade reflects the pending acquisition by Capital One (COF), however, and not a loss of confidence in the transaction closing in late 2024 or early 2025, says Seaport.
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