Capital One Shares Are Higher, Analysts Are Mixed After Quarterly Report

Capital One, the McLean, Va., banking company, reported mixed fourth-quarter results, generating mixed opinions on Wall Street.
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Capital One  (COF) - Get Report shares are higher after the bank reported mixed fourth-quarter results and analysts expressed a mix of opinions about the stock.

The McLean, Va., company earned $2.25 a share as revenue rose 6% from a year earlier to $7.43 billion. 

Analysts surveyed by FactSet were expecting the company to report earnings of $2.28 on revenue of $7.34 billion.

Credit Suisse maintained an outperform rating and $125 price target on Capital One thanks to “stable and strong credit in the credit card business.” But the firm also identified higher-than-expected operating expenses and said domestic card loan growth underperformed.

The firm said that while loan growth has been stable, it has not been accelerating as expected.

Meanwhile, at KBW analyst Sanjay Sakhrani raised his price target to $120 from $116 with an outperform rating.

“It was a constructive quarter overall, though there is still a lot of uncertainty around Capital One’s day-two CECL impact,” Sakhrani wrote. CECL, or current expected credit losses, is a new accounting standard that the SEC required businesses to adopt by Dec. 15, 2019.

Nomura analyst Bill Carcache raised his price target to $111 from $108 as the bank’s “strong finish to 2019 bodes well for 2020." 

Carcache says the headwinds associated with CECL are “already contemplated in consensus expectations. We were positively surprised by the strength of this quarter’s results and expect positive estimate revisions to drive [the] shares higher.”

Capital One shares at last check were 5% higher at $107.32. They are trading on Wednesday around their 52-week high. They have risen 40% from their 52-week low below $77, set almost a year ago.