Top-rated analyst, David George from Robert W. Baird has upgraded rating on Capital One Financial (COF) to Buy from Hold. Alongside this upgrade, the analyst raised his price target for COF stock to $200 (20.9% upside potential) from $190, reflecting optimism about the stock’s performance.
George sees the recent 10.2% decline in COF’s stock price over the past three months as an attractive entry point for investors. He views this dip as an opportunity to invest in a company that he expects will deliver some of the most profitable, risk-adjusted returns over the coming years.
Analyst Sees Benefits from DFS Deal
Also, he estimates Capital One’s adjusted earnings, post-acquisition of Discover Financial (DFS), to be around $22 per share. It must be noted that COF reported adjusted earnings of $13.96 for the full year 2024.
This robust earnings potential reflects the analyst’s confidence in the stock’s fair value, which he projects to reach nearly $225 in the next couple of years.
Moreover, George highlighted that the longer-term benefits and synergies from Capital One’s strategic moves, including the DFS deal. He noted that these benefits are not yet fully reflected in the current share price, suggesting room for growth as these synergies are realized.
Hedge Funds Bullish on COF Stock
Investors should note that hedge funds are also bullish on COF stock. According to TipRanks’ Hedge Fund Trading Activity tool (which analyzes data from Form 13-Fs to offer hedge fund signals), the Hedge Fund Confidence Signal is Positive for Capital One stock based on the activity of 33 hedge funds.
Overall, hedge funds increased their COF holdings by 773,000 shares in the last quarter.
Is COF a Good Stock to Buy?
Turning to Wall Street, COF stock has a Moderate Buy consensus rating based on 10 Buys and six Holds assigned in the last three months. At $215.40, the average Capital One price target implies a 30.23% upside potential.
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