We believe that Discover Financial’s stock (NYSE: DFS) has a strong upside potential of 16% in the near term. DFS trades at $64 currently and it has lost 23% in value year-to-date. It traded at a pre-Covid high of $74 in February and is 14% below that level now. Also, DFS stock has gained 144% from the low of $26 seen in March 2020, after the multi-billion dollar stimulus package announced by the U.S. government has helped stock prices recover to some extent. That said, the stock is leading the broader markets by a wide margin (S&P 500 is up 50%), as investors are positive about the growth in consumer demand over the coming months, leading to higher transaction volumes and credit card loans. Despite a significant improvement in DFS stock since late March, we believe that the stock still has room to grow in the near future. Our conclusion is based on our detailed analysis of Discover Financial’s stock performance during the current crisis with that during the 2008 recession in an interactive dashboard analysis.
2020 Coronavirus Crisis
Timeline of 2020 Crisis So Far:
- 12/12/2019: Coronavirus cases first reported in China
- 1/31/2020: WHO declares a global health emergency.
- 2/19/2020: Signs of effective containment in China and hopes of monetary easing by major central banks helps S&P 500 reach a record high
- 3/23/2020: S&P 500 drops 34% from the peak level seen on Feb 19, as COVID-19 cases accelerate outside China. Doesn’t help that oil prices crash in mid-March amid Saudi-led price war
- Since 3/24/2020: S&P 500 recovers 50% from the lows seen on