Bank of America sees Capital One ‘s planned acquisition of Discover as a positive catalyst. Analyst Mihir Bhatia upgraded Capital One to buy from neutral. Bhatia also hiked his price target on the financial stock by $28 to $235, which now implies upside of 15.9% above Tuesday’s closing level. Bhatia pointed to several potential inciting events to drive Capital One shares higher, including the bank’s acquisition of Discover. Shareholders from both companies voted to approve the deal, Capital one and Discover said this week. He said this deal should create operational upside, with the combined company expected to see multiple expansion and returns in at least the mid teens on equity. The analyst also said this acquisition would “fundamentally alter” Capital One’s standing in the payments space by giving it access to Discover’s closed-loop network. That should allow Capital One to better compete in the small business and premium consumer markets. “A combination of Improving credit trends, pending acquisition-related revenue, and expense synergies as well as the potential for increased capital returns provide a cascade of catalysts that should excite investors and can provide near-term upside to Street estimates,” Bhatia told clients. “We believe that acquisition synergies have the potential to outperform initial guidance given DFS’ improved performance outlook and business changes.” COF 1Y mountain Capital One, 1-year To be sure, not everyone is as bullish as Bhatia. Analysts polled by LSEG are split between hold and buy ratings on the stock. Additionally, Bhatia warned that any hiccups in the deal with Discover could result in downside for shares. Still, Capital One shares popped 1.6% in Wednesday’s premarket trading following the upgrade. The stock has jumped more than 13% so far in 2025.
