Morgan Stanley Upgrades Providian to 'Overweight'

Analyst Kenneth Posner thinks the financial service firm's restructuring plan could boost the share price over the next 12 months

Morgan Stanley upgraded Providian (PVN ) to overweight from equal-weight.

Analyst Kenneth Posner says having analyzed the company's restructuring plan, he finds the risk/reward trade-off intriguing. He believes the plan could raise Providian to $14 over the next 12 months; his $9 target leaves room for risk. Given Providian's success in raising liquidity,

Posner says it's difficult for him to see a downside risk below $5. He thinks the company should be able to dispose of its $3 billion high-risk portfolio at no more than a 40% discount, and reduce its operating costs in line with its smaller portfolio. He cut the $0.10 2002 EPS estimate to a $0.07 loss assuming the disposition of $3 billion in loans; and sees $1.55 2003 EPS.

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