PNC - Capital One upgraded to Neutral at Baird as bank sector fundamentals 'solid'

Baird analyst David George upgrades Capital One Financial (NYSE:COF) to Neutral from Underperform following the stock's recent underperformance (-20.1% since its downgrade) to the KBW Nasdaq Bank Index's (BKX) -0.6% decline. "We find the risk/reward of COF to be more balanced in the low $140s (~1.45x TBV)," the analyst wrote in a note to clients. Capital One (COF) stock rises 0.7% in midafternoon trading. Taking a broader look at U.S. banks, George sees fundamentals as "largely solid, as loan growth showing signs of life, credit costs remain benign, while markets revenues moderating sequentially." The sector, in general, still isn't compelling, he added. While COVID variant fears are valid, the market may also be "re-pricing intermediate term economic growth lower as government spend declines, tax rates increase," George wrote. Also a higher base rate of inflation is likely to affect consumer spending in the near- to intermediate-term, he said. The analyst's "favorite relative

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Capital One upgraded to Neutral at Baird as bank sector fundamentals 'solid'