Citi sees Discover deal as net positive for Capital One

Citi says Capital One’s (COF) plans to acquire Discover Financial (DFS) should further bolster its position as a leading credit card issuer and provide it a U.S. credit card network, a scarce asset within the country. Outside of the financial impacts, Citi sees the deal as a net positive for Capital One. The company added a valuable payments network to its tech-forward digital banking capabilities that may be able to unlock additional value relative to what either company could do on their own, the analyst tells investors in a research note. It keeps a Buy rating on Capital One with a $152 price target. The acquisition is a net long-term positive, but depending on up-front share dilution, Capital One shares may lag on Tuesday, adds Citi.