Oppenheimer Remains Bearish on Capital One Financial (COF) Following Announced Cabela's Portfolio Purchase
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Oppenheimer reiterated an Underperform rating and $59.00 price target on Capital One Financial (NYSE: COF) following the company's announced purchasing of Cabela's co-brand portfolio. However, Oppenheimer still views that consensus is mismodeling credit costs on the existing book.
Analyst Ben Chittenden commented, "The recent announcement that COF is purchasing Cabela's co-brand portfolio and extending the relationship for 10+ years is an incremental positive. We are raising our '17 estimate to $7.12 from $7.04. The Cabela's book represents a loyal, highFICO borrower with an attractive opportunity for COF to help continue to open up the credit box and drive incremental sales. With that said, we are still the low on the Street for '17 and maintain our view that consensus is mismodeling credit costs on the existing book (both from underappreciated actual reserve building for growth and the bifurcation between prime/subprime credit). Therefore, the announcement doesn't change our overarching Underperform recommendation. We've outlined many of the moving pieces to the thesis before, but we are adding additional data points below."
Shares of Capital One Financial closed at $72.76 yesterday.
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