As previously reported, Stephens analyst Vincent Caintic downgraded Capital One (COF) to Underweight from Equal Weight with a price target of $79, down from $140, citing worries about credit losses and net interest margin in Capital One’s auto lending business. While Capital One could try to maintain margin and credit, then auto origination volumes will collapse and "either scenario makes us cautious," Caintic tells investors. Ally Financial’s (ALLY) valuation has declined on these same concerns, but he thinks the market has not priced in auto margin downside for Capital One although he thinks the same pressure facing Ally will also hit Capital One, the analyst explained. After cutting his Capital One 2023 EPS forecast by 25% his view is now 2% below consensus, the analyst added.
Published first on TheFly
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