Evercore ISI lifts Capital One stock rating to Outperform

Published 12/03/2025, 09:10
Evercore ISI lifts Capital One stock rating to Outperform

On Wednesday, Evercore ISI upgraded Capital One Financial shares, listed on the NYSE under the ticker COF, from In Line to Outperform, setting a price target of $200.00. Trading at $165.40 with a P/E ratio of 14.25x and a market capitalization of $63 billion, Capital One appears undervalued according to InvestingPro analysis. The upgrade reflects a positive outlook on the company’s long-term earnings and return potential, particularly following the anticipated integration with Discover.

The analyst at Evercore ISI acknowledged the presence of risks, such as a weakening U.S. consumer market, potential delays in the closing of the Discover Financial Services (NYSE:DFS) deal, increased business investment, and recent stock performance. InvestingPro data shows the stock has declined 11.05% over the past week, though it maintains an impressive 31-year streak of consecutive dividend payments. Despite these concerns, the analyst believes that the stock’s current valuation does not fully reflect the long-term benefits that the Capital One/Discover combination could bring.

Capital One’s unique position is expected to provide opportunities for increased earnings, even with the possibility of challenges related to credit and revenue headwinds. The potential delay in the DFS deal and the likelihood of increased expenses due to network and regulatory compliance investments have led to a conservative approach in Evercore ISI’s forecasts. This caution has resulted in a slight reduction in the 2025 and 2026 earnings per share (EPS) estimates and a conservative estimate for 2027.

Even with a conservative outlook, the analyst’s model predicts a significant 17.7% compound annual growth rate (CAGR) in EPS and a 580 basis points return on tangible common equity (ROTCE) expansion by 2027, reaching 19.5%. The updated EPS estimates for 2025 and 2026, along with the new 2027 EPS and tangible book value forecasts, suggest substantial upside potential. This aligns with broader analyst sentiment tracked by InvestingPro, with price targets ranging from $176 to $257, while the platform’s comprehensive analysis indicates a FAIR financial health score. For detailed insights and additional ProTips on Capital One’s valuation and growth prospects, explore the full Pro Research Report available on InvestingPro.

In other recent news, Capital One Financial Corporation (NYSE:COF) has reported significant developments. Stockholders of both Capital One and Discover Financial Services have overwhelmingly approved the proposed acquisition of Discover by Capital One, marking a crucial milestone in the merger process. The merger is expected to be completed in early 2025, pending further regulatory approvals. Additionally, BofA Securities upgraded Capital One’s stock rating to Buy, raising the price target to $235, reflecting a positive outlook on the company’s growth potential.

In another analyst move, Baird upgraded Capital One’s stock rating from Neutral to Outperform, increasing the price target to $200. This upgrade is based on Capital One’s potential for profitability amid economic challenges. Furthermore, the U.S. Consumer Financial Protection Bureau (CFPB) has dropped its legal action against Capital One, which was accused of misleading consumers regarding savings account interest payments. Meanwhile, President Donald Trump’s company has filed a lawsuit against Capital One, alleging that the bank illegally closed accounts for political reasons. These recent developments underscore the dynamic environment surrounding Capital One, with implications for its future operations and market position.

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

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