A stock analyst upgraded shares of Green Dot Corp. on Friday, arguing that recent concerns over the prepaid card company's regulatory risks are overblown.
John Kraft, an analyst with D.A. Davidson & Co., wrote in a research note that the Monrovia, Calif., company is likely protected from a potential crackdown on fees.
Kraft cited a bill that New Jersey Sen. Robert Menendez introduced in December that would ban overdraft, balance inquiry, customer service, inactivity and account closure fees. Green Dot "does not charge for any of these services," Kraft wrote. "Consequently, we do not believe regulations will negatively impact" the company. Kraft upgraded Green Dot's shares to "buy" from "neutral." Green Dot's shares rose 2.5% Friday, to $45.50.
Four days earlier Thomas McCrohan of Janney Montgomery Scott cut Green Dot's 2011 and 2012 earnings estimates on potential pricing pressure from competition and regulatory scrutiny. Green Dot's shares closed down more than 8% that day.
