Barclays Expects Capital One To Beat Q3 Estimates

Barclays expects Capital One Financial Corp. COF’s third quarter earnings to top the Street view, driven by higher net interest margin and balance sheet growth.

Analyst Jason Goldberg expects Capital One to earn $2.00 a share, above the consensus at $1.96, when the company reports its quarterly results on October 25.

“[W]e expect COF to benefit from the start of its $2.5bn share repurchase authorization under CCAR 2016 and a modestly higher net interest margin and continued strong loan growth,” Goldberg wrote in a note.

Meanwhile, the company is expected to make an adjustment to its rewards program resulting in a $45-$55 million ($0.06) reduction in interchange income. The analyst also expects Capital One to recognize branch optimization charges.

According to Goldberg, the results would also show higher fee income, relatively stable expenses, higher NCOs and continued reserve build.

In addition, key items to watch include Cabela's deal, comments on credit quality, expenses, digital initiatives, CCAR 2016 and loan growth.

Goldberg rates Capital One Overweight, with a target price of $80.

At time of writing, shares of Capital One fell 1.45 percent to $72.27.