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UPDATE 1-UBS starts 3 credit card companies with neutral

Tue Nov 18, 2008 2:23pm EST

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Nov 18 (Reuters) - UBS started coverage of American Express Co (AXP.N), Capital One Financial Corp (COF.N) and Discover Financial Services Inc (DFS.N) with "neutral" ratings and said credit and revenue pressures would continue to hurt the companies going into 2009.

"American Express is a well-positioned player within the payments industry in the longer-term and is likely to benefit from the secular shift away from cash," analyst Robert Peruzzi said in a note to clients. He set a price target of $20 on the stock.

Peruzzi, however, added he was cautious on American Express given the company's high reliance on wholesale funding.

He also set a price target of $10 on Discover Financial and said he expects the company's card portfolio to experience a lower degree of credit deterioration relative to many peers.

Capital One's strong liquidity significantly limits the possibility of funding or liquidity issues at the company in the near to medium term, he said, and set a price target of $32 on the stock. (Reporting by Santosh Nadgir in Bangalore; Editing by Jarshad Kakkrakandy)

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