UPDATE: Compass Point Initiates Coverage On Santander Consumer USA

In a research note released Tuesday, Compass Point analyst Jason Stewart Initiated coverage on Santander Consumer USA (NYSE: SC) with a Neutral rating and $23.00 price target.

Stewart said that the company is transforming itself into a diversified consumer lender through new captive finance relationships and an unsecured consumer lending business. In addition, the analyst said that the diversification of revenue should be able to help insulate the income statement from cyclicality.

Stewart also said that the Fed remains an overhang -- the company's parent company, Banco Santander, did not meet the qualitative portion of the Fed's test.

Shares of Santander are down 1.69 percent Tuesday.