Barclays says reports over the Department of Justice’s competitive concerns in the subprime card market shouldn’t derail Capital One’s (COF) proposed takeover of Discover (DFS). There could be a path to regulatory approval through divestiture, which Barclays estimates would result in only a modest reduction in earnings estimates, the analyst tells investors in a research note. The firm believes the upside from network ownership overtime outweighs the earnings reduction. It keeps an Overweight rating on Capital Ono with a $220 price target.
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