BUZZ-Capital One Financial rises after BofA upgrades to 'buy'

Shares of consumer lender Capital One Financial COF.N rise 1.6% to $206.01 premarket

BofA Global Research upgrades COF to "buy" from "neutral"; raises PT to $235 from $207, a 15.9% upside to stock's last close

Brokerage says improving credit trends, potential for increased buybacks, and the pending $35.3 billion acquisition of Discover Financial Services DFS.N provide a cascade of catalysts for COF in the short-term that should excite investors

COF, DFS shareholders on Tuesday voted in favor to approve the transaction, marking another milestone towards deal completion

Deal still needs approval from the Federal Reserve and the Office of the Comptroller of the Currency, with COF anticipating the transaction will close in early 2025

In the longer-term, BofA thinks the Discover acquisition will enable COF to compete more effectively in the small business market and in the super-premium consumer market with American Express AXP.N

Brokerage believes the acquisition could enable COF to build a mass-market version of AXP by leveraging its large cardholder base

COF stock jumped 36% in 2024