Discover Downgraded by Analysts Following Mixed Fourth Quarter

Discover reports mixed fourth-quarter results, leading multiple analysts to lower the stock's rating.
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Discover Financial (DFS) - Get Report was declining Friday after the credit services company reported mixed fourth-quarter results, leading multiple analysts to lower the stock's rating.

The company reported fourth-quarter earnings of $2.25 a share on revenue of $2.94 billion, while Wall Street was expecting earnings of $2.24 a share on revenue of $2.95 billion.

"We are making carefully targeted investments in marketing, analytics and technology that contributed to our strong returns in 2019 and provide a solid platform for another year of profitable growth in 2020,” said CEO Roger Hochschild in a statement.

It wasn’t enough for analysts at Evercore who lowered the stock's price target to $75, a 13% decrease from its previous target, while also lowering its rating to underperform from in-line. Evercore’s price target is the lowest on Wall Street, according to Bloomberg.

The firm sees pressure on Discover's bottom line due to higher investments, increased credit costs and fewer buybacks. 

Evercore’s price target represents a potential 13% downside from the stock’s closing price on Thursday of $85.85.

Meanwhile, analysts at Piper Sandler cut their recommendation to neutral from overweight while setting a price target of $86.

Discover fell 7.41% in premarket trading to $79.49.

Fellow credit card company American Express (AXP) - Get Report was rising in premarket trading Friday after reporting a fourth-quarter profit of $2.03 a share while total revenue, including losses, rose 9% to $11.37 billion. Analysts were expecting earnings of $2.01 billion on revenue of $11.36 billion.

"We once again delivered steady, consistent performance in the fourth quarter, marking our 10 straight quarter of FX-adjusted revenue growth at or above 8 percent," said AmEx CEO Stephen J. Squeri.