Deutsche Bank Comments On Green Dot Underperformance

According to Deutsche Bank, Green Dot (NYSE: GDOT) has underperformed YTD (-26%) as doubts have emerged about growth expectations for active cards, as well as concerns on addressable mkt for GPR cards, new competitive threats, actions by regulators/retailers pressuring GDOT fees, and even accrual accounting practices, after an exceptional period saw stock +53% vs IPO price at year-end.

Deutsche Bank reported that it has a high degree of confidence in GDOT's ability to meet/beat expectations this yr, and is comfortable owning the stock into 1Q results, esp. w/ stock trading at ~25% discount to comps on PEG. “We adjusted our PT from $65 to $58, aligned w/ midpoint of range derived from our comps (based on PEG ratio) and normalized earnings (discounting future EPS ests of $2.90 in 2013 to present, using exit multiples of 24-29x). Downside risk: client concentration, fin'l impact of future renewals, high attrition, increased regs.”

Green Dot closed yesterday at $42.91.