Green Dot Corp.'s share price has approached the $55 target set by Lake Street Capital Markets analyst Josh Elving, who downgraded the company to "hold" from "buy" in an Oct. 11 research note to clients.
The company's recent $54.71 share price reflects an improvement in legacy fundamentals and growth potential from new initiatives, Elving wrote. Interest in Apple Pay Cash, marketing efforts by the CEO and positive analyst commentary have pushed the company's valuation and price-to-earnings multiples upward, and Elving thinks Green Dot's shares are fairly valued.
A success with Apple Pay Cash, for which Green Dot and an affiliate are program manager and regulated bank partner, could drive the company's multiples higher still, the analyst said.
"We are impressed by the improvements in execution over the past few years and are optimistic about opportunities to tap into a millennial demographic that prefers a mobile, self-serve banking solution and is willing to pay a premium for it," Elving said.
He moved his price target up from $44. He held his third-quarter EPS estimate at 27 cents and his full-year 2017 EPS estimate at $2.08. Elving increased his fiscal year 2018 EPS estimate to $2.35 from $2.31 and set a full-year 2019 EPS estimate of $2.75.