BTIG has lowered its price target for Capital One Financial (NYSE: COF) to $270 from an earlier figure of $308. This revision comes in the wake of Capital One’s announcement that it is acquiring Brex, a privately held entity. At $235.07 per share, Capital One’s current market capitalization stands at approximately $149.44 billion. The company’s valuation, indicated by a price-to-earnings (P/E) ratio nearing 98, suggests an overvalued stock according to InvestingPro metrics.
The decrease in the price target reflects expectations of near-term dilution resulting from the Brex acquisition, as well as an anticipated deceleration in share repurchase activity over the forthcoming two years. Vincent Caintic, BTIG’s analyst, conveyed these insights during the update. Specifically, BTIG has revised its earnings per share forecasts downwards by 2% for 2026 and 10% for 2027, setting new EPS estimates at $18.97 and $22.49, respectively, while also introducing a 2028 EPS estimate of $24.74.
A notable aspect of this EPS adjustment is that roughly half the reduction stems from a tapering in share buyback volumes. BTIG now forecasts $8.3 billion and $6.8 billion in capital returned through share repurchases for 2026 and 2027, down from previous expectations of $14.4 billion and $7.7 billion. The other half of the EPS decline is attributed to increased credit provisions, reflecting an assumption that credit conditions will remain steady at current levels.
Nonetheless, analysts maintain a general bullish outlook, as evident from a consensus recommendation score of 1.65, with price targets spanning from $216 to as high as $310.
Regarding Brex, BTIG’s assumptions, derived from publicly available information, include current annualized revenues of $700 million, growing at a rate of 20% per year. Operating expenses presently offset the entire revenue base but are projected to remain largely flat moving forward. Additionally, BTIG estimates that Capital One will assume approximately $13 billion in Brex deposit balances.
BTIG acknowledges that the acquisition aligns strategically for Capital One over the longer term, but it anticipates that the transaction will consume around 40 basis points of CET1 capital. This use of capital is expected to impact Capital One’s near-term financial performance.
In related developments, Capital One disclosed its fourth-quarter earnings for 2025, reporting earnings per share of $3.86, which fell short of the anticipated $4.17, constituting a negative surprise of 7.43%. Conversely, revenue stood at $15.6 billion, modestly surpassing expectations of $15.47 billion. This mixed earnings report highlights both challenges and potential avenues for growth as Capital One navigates current market conditions. Stakeholders and market watchers are expected to monitor closely Capital One’s progression following these announcements.
BTIG has adjusted its price target for Capital One Financial from $308 to $270 while retaining a Buy rating following Capital One’s acquisition of Brex. The revision factors in near-term dilution and a projected slowdown in share repurchases, with updated earnings per share (EPS) estimates reflecting these changes. Although Capital One's recent quarterly earnings per share missed estimates, its revenue slightly exceeded expectations, highlighting a complex outlook for the financial services firm.
Key Points
- BTIG lowered Capital One's price target to $270 from $308 but kept a Buy rating after the Brex acquisition announcement.
- EPS estimates for 2026 and 2027 were reduced by 2% and 10%, respectively, due to near-term dilution and slower share repurchases.
- Capital One’s recent Q4 2025 earnings per share missed estimates by 7.43%, while revenue slightly exceeded analyst expectations.
Risks
- Reduced share repurchases as a result of the Brex deal could limit shareholder returns affecting investor sentiment and stock valuation.
- Impact on Capital One’s CET1 capital by approximately 40 basis points may constrain near-term financial performance in the banking sector.
- Higher credit provisions estimated by BTIG signal potential exposure to credit risk, adding uncertainty to future earnings projections.