Capital One Financial (COF) and Discovery Financial (DFS) Appear Best Positioned for This New Banking Environment - Jefferies

Jefferies analyst John Hecht reiterated Buy ratings on Capital One Financial (NYSE: COF) and Discover Financial Services (NYSE: DFS) as the best positioned financials in a world of rising rates and moderate inflation.

The analyst stated "we consider the group relatively neutral to rising rates, but highlight various other drivers impacting NIM. Regarding inflation, we do not forecast a materially negative impact on credit as our economist anticipates wage growth outpacing inflation - that said, we do analyze the impact of rising wages on companies under coverage. Regarding capital/credit normalization, our analysis indicates that consumer banks have excess capital such that they can grow loan portfolios, provision for credit normalization and continue to pay out high amounts of capital through 2024. Lastly, while ESG is a focus for all companies, AXP and COF appear strongest. Weighing each component above, we consider COF, DFS and SLM as best positioned for the intermediate/long-term and emphasize COF and DFS over the next several years. "

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 $133.67 yesterday.

You May Also Be Interested In

• Midday movers: Travelers, JB Hunt fall; United Airlines rises
• Aerospace parts manufacturer Loar Holdings aims up to $2.28 billion valuation in US IPO
• APi Group Announces Pricing of Public Offering of Common Stock