Wells Fargo has increased its price target for Capital One (COF, Financial) from $210 to $225, maintaining an Overweight rating on the stock. The decision comes in light of a consistent decrease in card delinquency rates and a notable year-over-year decline in net charge-offs (NCOs). Wells Fargo anticipates further reserve releases continuing through 2025, reflecting a positive outlook for the company.
The financial firm also expects that substantial share buybacks following the closure of Discover (DFS) on May 18th should provide a significant technical advantage for Capital One. This move is seen as a strategic enhancement in the company's financial positioning, potentially boosting its stock performance in the coming years.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 18 analysts, the average target price for Capital One Financial Corp (COF, Financial) is $212.91 with a high estimate of $264.00 and a low estimate of $160.00. The average target implies an upside of 20.66% from the current price of $176.46. More detailed estimate data can be found on the Capital One Financial Corp (COF) Forecast page.
Based on the consensus recommendation from 22 brokerage firms, Capital One Financial Corp's (COF, Financial) average brokerage recommendation is currently 2.0, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Capital One Financial Corp (COF, Financial) in one year is $154.42, suggesting a downside of 12.49% from the current price of $176.46. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Capital One Financial Corp (COF) Summary page.
COF Key Business Developments
Release Date: April 22, 2025
- Net Income: $1.4 billion or $3.45 per diluted share; adjusted EPS of $4.06.
- Pre-Provision Earnings: $4.1 billion, flat compared to the fourth quarter; adjusted increase of 2%.
- Revenue: Declined 2% due to two fewer days in the quarter.
- Noninterest Expense: Decreased 5% on an adjusted basis.
- Provision for Credit Losses: $2.4 billion, a decrease of $273 million from the prior quarter.
- Allowance Release: $368 million, bringing the allowance balance to $15.9 billion.
- Total Liquidity Reserves: Increased to $131 billion, up $7 billion from last quarter.
- Cash Position: Approximately $49 billion, up $5 billion from the prior quarter.
- Net Interest Margin (NIM): 6.93%, a decrease of 10 basis points from last quarter.
- Common Equity Tier 1 Capital Ratio: 13.6%, up 10 basis points from the prior quarter.
- Domestic Card Purchase Volume Growth: 5% year-over-year; adjusted growth of 6% accounting for leap year.
- Domestic Card Revenue Margin: Increased 37 basis points to 18.2%.
- Charge-Off Rate: 6.19%, up 25 basis points year-over-year.
- Domestic Card Noninterest Expense: Up 13% year-over-year.
- Marketing Expense: $1.2 billion, up 19% year-over-year.
- Auto Originations: Up 22% from the prior year quarter.
- Consumer Banking Revenue: Down 2% year-over-year.
- Auto Charge-Off Rate: 1.55%, down 44 basis points year-over-year.
- Commercial Banking Revenue: Down 7% from the linked quarter.
- Commercial Banking Net Charge-Off Rate: 0.11%, down 15 basis points from the sequential quarter.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Capital One Financial Corp (COF, Financial) reported strong first-quarter earnings with $1.4 billion in net income, translating to $3.45 per diluted share.
- The company achieved a 5% year-over-year growth in purchase volume in its Domestic Card business, with revenue up 7% from the first quarter of 2024.
- Capital One Financial Corp (COF) saw a decrease in its provision for credit losses by $273 million compared to the prior quarter, driven by lower net charge-offs and larger reserve releases.
- The company's liquidity reserves increased by $7 billion from the previous quarter, ending at $131 billion, supported by strong deposit growth.
- Capital One Financial Corp (COF) received regulatory approval for its acquisition of Discover, which is expected to create a leading consumer banking and payments platform with significant strategic and economic upside.
Negative Points
- Revenue in the linked quarter declined by 2%, attributed to two fewer days in the quarter.
- The net interest margin decreased by 10 basis points from the previous quarter, impacted by fewer days in the quarter.
- Noninterest expense increased by 27% year-over-year in the Consumer Banking segment, driven by higher marketing and technology investments.
- The charge-off rate in the Domestic Card business increased by 25 basis points year-over-year, partly due to the end of the Walmart loss-sharing agreement.
- Capital One Financial Corp (COF) faces heightened uncertainty due to economic conditions, including potential impacts from tariffs and inflation, which could affect future credit performance.
