UPDATE: Goldman Adds Capital One Shares to 'Conviction Buy' List
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:
- card growth turning positive in 2H14, driving margins higher;
- expense leverage (OPEX target of $10.5bn in 2014), which could add about $1.40-$2 of earnings over time;
- further progress on its transition to a capital returner (we see 65-70% payout; consensus 62%); and
- 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.
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