Capital One Financial "buy," estimates reduced

08/21/07 - Stifel Nicolaus

NEW YORK, August 21 (newratings.com) - Analysts at Stifel Nicolaus & Company maintain their "buy" rating on Capital One Financial Corp (COF), while reducing their estimates for the company. The target price is set to $90.

In a research note published this morning, the analysts mention that the company is closing its Alt-A mortgage bank, GreenPoint, which it had acquired nine months ago. Capital One Financial would incur after-tax charges of $860 million related to the closure of the unit, the analysts say. Capital One Financial’s decision to close the unit removes a major overhang on the company’s stock, and the company is well positioned to withstand the current turmoil in the market due to its robust core profitability and diverse funding base, Stifel Nicolaus & Company adds. The EPS estimates for 2007 and 2008 have been reduced from $7.09 to $6.45 and from $8.60 to $8.10, respectively.