FW: Investors applaud Target’s plan to unload plastic

Professor Victor Stango via Financial Week about Target's possible plan to sell off its $7 billion customer credit card business:

“The question isn’t ‘should they sell,’ but my first reaction is ‘why shouldn’t they sell,’” said Victor Stango, associate professor of economics at the Tuck School of Business at Dartmouth College. “The market likes this move. It’s divesting a line of business that isn’t core.”

“Ultimately, the premium will depend on the quality of the portfolio, which has historically been good but has also been growing riskier,” Mr. Stango said.

While some analysts think Target’s move may be a bit late, Mr. Stango believes Target should sell even if it doesn’t get much of a premium.

Source: Financial Week by by Marine Cole September 24, 2007