Compass Point analyst Michael Tarkan downgraded Green Dot Corp. to "neutral" from "buy" on a re-rating of its surging shares.
He wrote that the company is no longer a "One-Trick Prepaid Pony" after it diversified revenue sources, stabilized organic growth, launched new partnerships, returned capital and executed against expectations over the past two years.
Tarkan sees further room for growth but believes that at current levels the company's risk/reward ratio is more balanced, since Green Dot's shares have already re-rated higher. The stock has risen 127% over the past 12 months, he noted.
He added that recent developments in alternative products, such as secured credit cards and bank deposit advance, may pull customers away from the traditional prepaid card market.
The analyst's price target is $72 per share. Tarkan's EPS predictions are $2.90 and $3.30 for 2018 and 2019, respectively.
