Drew Angerer/Getty Images News
Capital One Financial (NYSE:COF) was added to Wells Fargo’s Q3 2024 Tactical Ideas List on Monday.
The analysts said COF shares have upside due to reasons such as, odds of the DFS merger increasing towards the election, low-end consumer concerns fading and edging closer to reserve release.
“DFS shares are trading 10%+ below the implied offer price of the COF acquisition, showing us the markets sees only ~50% odds of regulatory approval. We believe odds will increase as we move towards the November election, as it could lead to regulatory body changes. COF shares could then benefit from high deal odds,” the note stated.
The analysts expect COF’s monthly credit metrics to prove to be resilient.
“With Q2 earnings, we expect more discussions about potential reserve release for late 2024 or early 2025,” Wells Fargo said.
Shares in the company were up 1.9%.