Evercore ISI Remains Sidelined on Capital One Financial (COF) as Credit Concerns Likely Restrain Valuation

Evercore ISI maintained a Hold rating on Capital One Financial (NYSE: COF), and cut the price target to $70.00 (from $78.00), following the company's 4Q earnings report. COF reported a core EPS at $1.65. This compares to consensus estimates of $1.61. However, credit concerns are likely to restrain COF's valuation until greater visibility into credit trends from the card, energy, and taxi medallion portfolios can be ascertained.

Analyst John Pancari commented, "COF reported continued ops EPS of $1.56. Ex an OTTI charge, GE-related acq costs, planned site closures, and revisions to previously recorded restructuring charges, we peg core EPS at $1.65. This compares to our est of $1.55 and cons of $1.61. Upside to our est was driven by higher non-II (+$0.14), higher NII (+$0.06), and lower than expected LLP (+$0.04), partly offset by higher expenses (- $0.10) and higher preferred div (-$0.04).

"Modestly better than expected results from card growth and interchange income support COF's outlook, but do not change our opinion that higher credit costs should limit earnings growth. Additionally, credit concerns are likely to restrain COF's valuation until greater visibility into credit trends from the card, energy, and taxi medallion portfolios can be ascertained."

For an analyst ratings summary and ratings history on Capital One Financial click here. For more ratings news on Capital One Financial click here.

Shares of Capital One Financial closed at $60.38 yesterday.

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