Capital One Financial (COF – Research Report), the Financial sector company, was revisited by a Wall Street analyst today. Analyst Mihir Bhatia from Bank of America Securities upgraded the rating on the stock to a Buy and gave it a $235.00 price target.
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Mihir Bhatia has given his Buy rating due to a combination of factors including the strategic benefits and operational enhancements expected from Capital One’s pending acquisition of Discover. This acquisition is anticipated to unlock significant synergies, providing Capital One with the potential to achieve mid-teens returns on equity and possibly expand its market valuation. The acquisition is also expected to increase Capital One’s revenue and reduce expenses, thereby offering a compelling proposition for investors in the near term.
Bhatia also notes that longer-term, the acquisition would reposition Capital One in the payments ecosystem, giving it the capability to effectively compete in both the small business and super-premium consumer markets. This strategic move is seen as a way to bolster Capital One’s offerings and expand its franchise across deposits, cards, and banking services. However, he cautions that the acquisition is still subject to regulatory approval, and any failure to close the deal could negatively impact investor sentiment and the earnings outlook.
According to TipRanks, Bhatia is a 4-star analyst with an average return of 8.9% and a 64.32% success rate. Bhatia covers the Financial sector, focusing on stocks such as Synchrony Financial, Bread Financial Holdings, and American Express.
In another report released today, Barclays also maintained a Buy rating on the stock with a $220.00 price target.