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.