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UPDATE: Goldman Adds Capital One Shares to 'Conviction Buy' List

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In a report published January 7th, Goldman Sachs added shares of Capital One Financial Corp. (NYSE: COF) to the firm's Conviction Buy list. The firm lifted its price target on Capital One from $80 to $90.

What's in your wallet? According to Ryan Nash with Goldman Sachs, it should be Capital One. Nash outlines four reasons for the upgrade:

  1. card growth turning positive in 2H14, driving margins higher;
  2. expense leverage (OPEX target of $10.5bn in 2014), which could add about $1.40-$2 of earnings over time;
  3. further progress on its transition to a capital returner (we see 65-70% payout; consensus 62%); and
  4. investors becoming more comfortable with a sub-5% long-term NCO ratio. Combined, these elements should translate to $8+ of earnings over time.”

The report also noted a revision to the valuation of COF, “We revise our 4Q13/2014/2015 EPS estimates to $1.51/$7.10/$7.50 from $1.42/$7.05/$7.35 on lower credit costs. We raise our 12-month P/E-based price target to $90.”

Shares of Capital One Financial closed at $77.28, up about 0.9 percent for the session.

Latest Ratings for COF

DateFirmActionFromTo
Dec 2014JefferiesInitiates Coverage onHold
Nov 2014Deutsche BankInitiates Coverage onBuy
Nov 2014NomuraDowngradesBuyNeutral

View More Analyst Ratings for COF
View the Latest Analyst Ratings

Posted-In: News Upgrades Price Target Analyst Ratings

 

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