On Wednesday, Wolfe Research adjusted its rating for Discover Financial Services (NYSE: NYSE:DFS), moving it from "Outperform" to "Peer Perform". In a shift from providing specific price targets, the firm has introduced a fair value range for Discover Financial's shares, now set between $121 and $137.
The modification in the stock's outlook comes as Discover Financial is poised to be acquired by Capital One Financial Corp (NYSE:COF). The deal is anticipated to be finalized by the end of 2024 or early 2025. Wolfe Research's decision reflects a change in their approach to evaluating stocks that are not expected to outperform their peers.
Despite the downgrade, Wolfe Research has maintained its standalone estimates for Discover Financial. The company's financial projections and performance expectations remain consistent with previous evaluations.
This adjustment in rating and valuation approach by Wolfe Research may influence investor perspectives on Discover Financial as it transitions towards merging with Capital One. The fair value range provides a new framework for investors to consider the stock's value in light of the upcoming acquisition.
The market will continue to monitor the progress of Discover Financial's acquisition by Capital One, taking into account the insights from Wolfe Research and other financial analysts. The completion of this deal is set to reshape the financial landscape, with Discover Financial becoming a part of Capital One's broader operations.
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