NEW YORK ( TheStreet) -- The consumer credit space is rapidly evolving, with all major players working to grow their international business and also jump on the mobile payments bandwagon.
KBW analyst Sanjay Sakhrani rates eBay (EBAY - Get Report) -- whose PayPal subsidiary in August signed a landmark deal with card lender and payment processor Discover Financial Services (DFS - Get Report) -- and eight other companies "Outperform," and on Friday said that third-quarter "earnings season looks to be solid for the companies within our coverage universe," as "operating indicators such as credit quality and volume trends still remain relatively positive and resilient."
Sakhrani said that KBW continues "to maintain an overweight bias in our ratings for most companies we follow in the sector," because of the good operating climate and because "valuations remain attractive relative to other financials."
With several of the stocks seeing very strong price performance, investor fears of a 2013 recession with the " fiscal cliff" looming, continued uncertainty in Europe and slowing growth in China, it's not unreasonable to expect a fourth-quarter dip for some of these names, but Sakhrani said that "industry growth trends and current portfolio dynamics of card issuers (i.e., cleaner and stronger core group of customers following the recession and better cardholder payment behavior) help to lessen any potential impact" of an economic slowdown."In terms of the potential effects of a Fiscal Cliff specifically," he said that "the associated implications (i.e., higher tax rate and dividend tax rate, etc.) are less of an impact for the cards/payments space (with possibly the exception of
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