Barclays Maintains an 'Overweight' on Capital One Financial (COF); Implications of an ING Bank Acquisition
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Price: $148.33 +2.64%
Rating Summary:
14 Buy, 23 Hold, 3 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 10 | New: 11
Rating Summary:
14 Buy, 23 Hold, 3 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 10 | New: 11
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Barclays maintains an 'Overweight' on Capital One Financial (NYSE: COF), PT $65.
Barclays analyst says, "The Wall Street Journal reported this morning that COF is the "lead contender" among bidders for ING's U.S. bank and that the ING (NYSE: ING) board is expected to decide Wednesday on the buyer ("ING's Board Will Meet On Sale of Online Bank" 6/14/11, WSJ). Reportedly, GE (NYSE: GE) is also in the running, but may be at a disadvantage because it is reluctant to assume mortgage assets. The story also indicates that the purchase price is in the "high single-digit billions," which implies a valuation of roughly 1x book value."
"If, however, COF were to acquire ING for a meaningful discount to book value or is able to use the acquisition to fund a deal for some of the $78B of credit card receivables currently for sale by Target (NYSE: TGT), HSBC (NYSE: HBC) and Citi (NYSE: C), we expect market reaction could be more positive. With COF trading at 7.2x our 2012 estimate, the stock still looks cheap to us even if we assume modest earnings dilution from an acquisition of ING Bank. We continue to rate the shares Overweight, but recognize such an acquisition could push out the realization of upside in the shares until investors become more comfortable with the company's strategy should a deal occur."
For more ratings news on Capital One Financial click here and for the rating history of Capital One Financial click here.
Shares of Capital One Financial closed at $48.43 yesterday.
Barclays analyst says, "The Wall Street Journal reported this morning that COF is the "lead contender" among bidders for ING's U.S. bank and that the ING (NYSE: ING) board is expected to decide Wednesday on the buyer ("ING's Board Will Meet On Sale of Online Bank" 6/14/11, WSJ). Reportedly, GE (NYSE: GE) is also in the running, but may be at a disadvantage because it is reluctant to assume mortgage assets. The story also indicates that the purchase price is in the "high single-digit billions," which implies a valuation of roughly 1x book value."
"If, however, COF were to acquire ING for a meaningful discount to book value or is able to use the acquisition to fund a deal for some of the $78B of credit card receivables currently for sale by Target (NYSE: TGT), HSBC (NYSE: HBC) and Citi (NYSE: C), we expect market reaction could be more positive. With COF trading at 7.2x our 2012 estimate, the stock still looks cheap to us even if we assume modest earnings dilution from an acquisition of ING Bank. We continue to rate the shares Overweight, but recognize such an acquisition could push out the realization of upside in the shares until investors become more comfortable with the company's strategy should a deal occur."
For more ratings news on Capital One Financial click here and for the rating history of Capital One Financial click here.
Shares of Capital One Financial closed at $48.43 yesterday.
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