Capital One(US:COF) Goldman Sachs·2025-06-11 05:45Investment Rating - The report assigns a "Buy" rating to Capital One Financial Corp. (COF) with a 12-month price target of $242, indicating an upside potential of 20.4% from the current price of $201 [6][7]. Core Insights - The strategic vision for the Discover network is focused on expanding international acceptance through partnerships with merchant acquirers, other networks, financial institutions, and merchants. The emphasis is on building acceptance and consolidating technology during the integration phase [1]. - The state of the consumer appears strong, with low unemployment, rising real wages, and consumer debt levels consistent with pre-pandemic times. COF has seen better-than-expected credit performance, and the deferred non-charge-off (NCO) phenomenon is ending, which is expected to positively impact credit performance [2]. - COF's path to capital return is becoming clearer, with expectations of receiving CCAR results in June. The company plans to operate with a CET1 ratio just shy of 14%, allowing for significant buyback authorization in late Q2 or early Q3 [5]. Summary by Sections Strategic Vision - COF is committed to expanding the Discover network internationally, focusing on building acceptance and consolidating technology during the integration period [1]. Consumer State - The consumer market remains robust, with strong employment and wage growth, alongside manageable debt levels. Credit performance has exceeded expectations, and growth in the auto sector is being pursued despite concerns over vehicle prices [2]. Capital Return - COF is preparing for increased capital returns, with a CET1 ratio target of nearly 14% and plans for a large buyback authorization expected in the near future [5].