:max_bytes(150000):strip_icc()/GettyImages-2233929081-c24a39dec83c483c8c83f09ad7edf58d.jpg "Capital One Stock Is a Big Loser Today. But It Still Has Some Big Fans.")
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Key Takeaways
- Shares of credit card lender Capital One have been sinking since President Trump vowed to cap interest rates on credit cards. They fell even further on Friday.
- But many analysts are bullish. CNBC’s Jim Cramer said of Capital One: “This is the one to own.”
Capital One might be “what’s in your wallet.” Should it be in your portfolio?
Credit-card stocks have taken a hit since President Donald Trump earlier this month vowed to cap their interest rates and, more recently, called on Congress to make his proposal law; Shares of companies like American Express (AXP) to Visa (V) fell on the news, though they’ve stabilized somewhat. Capital One (COF), meanwhile, is among today’s top decliners in the S&P 500 after it announced its latest earnings and a multibillion-dollar acquisition.
Wall Street analysts and talking heads, however, really like the stock.
WHY THIS MATTERS TO YOU
Analysts broadly are bullish about Capital One despite some disappointment in parts of its Q4 numbers. It, however, and others could suffer if the president’s proposed interest rate cap becomes a reality.
Wall Street price targets suggest upside ranging from almost 20% to more than 80% in the next 12 months. Of the 15 analysts tracked by Visible Alpha, 11 have a buy rating, effectively a bullish stance; the service’s mean target on the stock is around $281, which implies upside of almost 20%.
“This is the one to own,” CNBC’s Jim Cramer said on Friday, saying shares of Capital One—which grew substantially with the 2025 acquisition of Discover—could reach $400 within a year—implying a return of more than 80% from recent prices. CEO Richard Fairbank has created a “powerhouse brand,” Cramer said.
Some of the latest pressure on the shares might be associated with the company’s Thursday miss relative to quarterly earnings per share estimates. While its Q4 revenue of $15.6 billion marginally beat analyst expectations, its diluted EPS of $3.86 missed estimates for $4.17, according to Visible Alpha.
Capital One yesterday also said it would acquire Brex, a privately held fintech company specializing in corporate credit for over $5 billion in cash and stock. That would give the credit card lender a stronger presence in the business payments space, analysts said. The transaction is set to close in the middle of this year.
There’s somewhat more uncertainty in Trump’s card proposal. Bank CEOs have broadly panned the idea of a cap on credit card interest rates, and Capital One’s is no different. Fairbank during a conference call yesterday warned that such a cap would have “a number of unintended consequences,” per a transcript provided by Alpha Sense.
In order to stay competitive, credit card companies would be forced to slash credit lines to customers, and place restrictions on accounts, according to Fairbank. “A material contraction in available credit would likely cause multiple shocks throughout the economy, as the lack of credit would result in greatly reduced consumer spending and would likely bring on a recession,” he said.
