DFS - Capital One Synchroiny ADS downgraded at Wolfe on low-end consumer worries

Wolfe Research analyst Bill Carcache downgraded Capital One Financial (NYSE:COF -2.3%), Synchrony Financial (NYSE:SYF -2.4%), and Alliance Data Systems (NYSE:ADS -2.0%) to Peer Perform from Outperform as he grows "incrementally cautious on the low-end consumer." Russia's invasion of Ukraine has heightened concern about increased inflationary pressures on issuers with elevated exposure to low-end consumers. Risk-reward favors issuers more weighted toward prime and super-prime credit, chiefly American Express (AXP +2.4%) and Discover Financial (DFS -2.0%), both rated at Outperform. "Even if a peaceful settlement is reached, we see significant risk that higher commodity prices will continue to stoke inflationary pressures (especially if Russia remains isolated), translating into faster-than-previously expected credit normalization headwinds, particularly for issuers with outsized exposure to the low-end consumer," Carcache wrote in a note to clients. He also sees some longer-term risk for private label issuers from the Consumer Financial Protection Bureau's focus on late fees. "While we

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Capital One, Synchroiny, ADS downgraded at Wolfe on low-end consumer worries