Zacks Investment Research downgraded shares of Capital One Financial Corp. (COF) from OUTPERFORM to NEUTRAL on September 03, 2013, with a target price of $68.00.
We have downgraded our long-term recommendation on Capital One to Neutral due to continued increase in operating expenses. However, the company's second-quarter 2013 earnings substantially surpassed the Zacks Consensus Estimate. The results were driven by top-line growth, partially offset by a rise in operating expenses. Moreover, strong profitability and capital ratios as well as improved asset quality were the positives for the quarter. Exposures to commercial real estate, weak demand for loans and the impact of new financial regulations are expected to dent the company's financials. However, we anticipate continued synergies from its geographic diversification and recent acquisitions. Moreover, the resurgence across all its businesses will continue to support financials.
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