Capital One stock rating upgraded to Buy at TD Cowen on Discover acquisition

Investing.com - TD Cowen upgraded Capital One Financial (NYSE:COF) from Hold to Buy and raised its price target to $258.00 from $184.00, citing potential benefits from the company’s Discover acquisition. The stock, currently trading near its 52-week high of $221.95, has delivered an impressive 63% return over the past year, according to InvestingPro data.

The upgrade highlights Capital One’s consistent history as one of the most successful card issuers, having outgrown the industry and gained market share over the years.

TD Cowen noted that with the Discover acquisition, Capital One now owns an actual payment network, a rare asset in the industry that could warrant a higher valuation for the combined company.

While Discover had mixed results growing international acceptance of its network as a standalone company, TD Cowen believes Capital One’s track record of execution and willingness to make long-term investments could lead to better management of Discover’s network assets.

The firm cautioned that it will likely take years before Capital One can transition its high-spending cardholders to a proprietary network, suggesting the full benefits of the acquisition will take time to materialize.

In other recent news, Capital One Financial Corporation’s preliminary Stress Capital Buffer Requirement is set to decrease to 4.5% from October 1, 2025, as calculated by the Federal Reserve’s 2025 Comprehensive Capital Analysis and Review process. The current requirement remains at 5.5% until the end of the third quarter of 2025. This adjustment is part of the regulatory measures ensuring financial institutions can withstand economic stress. JPMorgan has raised its price target for Capital One to $210, citing synergies from the recent merger with Discover, which closed on May 18, 2025. This merger is expected to bring cost savings, operational efficiencies, and new revenue opportunities. UBS maintains a Buy rating with a price target of $240, highlighting Capital One’s strong financial position with an updated Common Equity Tier 1 (CET1) ratio of 13.4%. Moody’s Ratings confirmed Capital One’s ratings following the Discover acquisition, noting improved capitalization and expected profitability. The acquisition positions Capital One as the largest U.S. credit card issuer by receivables and the eighth-largest bank by total assets.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.