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Nomura Instinet downgrades Capital One

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Nomura Instinet downgrades Capital One

Downgrades

* Nomura Instinet's Bill Carcache lowered Capital One Financial Corp.'s rating to "neutral" from "buy."

While the downgrade was on valuation, the analyst also commented on the stock's re-rating potential being "limited by its market inefficiency." Carcache wrote: "Regional banks offer [Capital One]-level returns at lower risk, while other card issuers [such as American Express Co. and Discover Financial Services] offer higher returns at comparable risk." He added that the company "has exposed shareholders to greater EPS volatility than any U.S. regional bank or credit card issuer under our coverage since 2004."

Carcache lowered the year-end 2018 target price by $2 to $109.

Industry reports

* First Busey Corp. again leads D.A. Davidson's Kevin Reevey's quarterly ranking of Illinois banks. The acquisitive First Busey's results reflect a loan and deposit boost from recently closed deals, but it was also No. 1 in efficiency ratio with 54.74%.

Reevey's ranking took into account quarter-over-quarter core pretax, pre-provision EPS growth, net interest margin expansion, loan and deposit growth, efficiency ratios and the percentage of noninterest demand deposit accounts in a bank's total deposits. MB Financial Inc. stood out in the latter metric, with 42.7% of deposit balances composed of noninterest DDAs. First Midwest Bancorp Inc. came second with 32.4%.

* And how bank stocks trade going into April may get a nudge from some upcoming events, Compass Point's Charles Peabody wrote.

U.K. banks are reporting their fourth-quarter 2017 earnings this week, for example, and their trading trends in the year to date could lead to "a number of Q1'18 EPS upward revisions for the major U.S. banks/brokers." Credit Suisse Group AG's own guidance suggests a 50% to 60% jump in trading revenue quarter over quarter, the analyst said.

JPMorgan Chase & Co. is also likely to give trading data on its Feb. 27 investor day.