We are upgrading our recommendation on Capital One (COF) to Outperform. The company’s third quarter earnings were substantially ahead of the Zacks Consensus Estimate, driven primarily by higher-than-expected revenue and almost stable expenses.
However, increased provisions and decrease in average deposits were on the downside. Nevertheless, we anticipate continued synergies from the company’s geographic diversification and expense management initiatives. Additionally, the repayment of the bailout money and the warrants sell-off by the Treasury augur well for investors, as the company is now free from government intervention and pay restrictions.Zacks Investment Research
