By Emily Dattilo

Capital One Financial is adding a winner to its wallet, BofA Securities argued on Wednesday.

Analysts led by Mihir Bhatia upgraded Capital One stock to Buy from Neutral and increased their target for the price to $235 from $207.

The rating boost arrived after Capital One's bid for Discover Financial Services received a stamp of approval from both companies' shareholders on Tuesday afternoon.

"We think that Capital One is well positioned to benefit from the pending Discover acquisition, which should unlock near-term synergies and provide meaningful strategic and operational upside for Capital One longer term," BofA wrote.

Shares edged higher on the news, with Capital One stock up 1.8% to $206.42, while Discover shares rose 1.9% to $200.03, indicating that perhaps the stockholder approval was already factored into the stock prices. The S&P 500 was flat.

For background, about a year ago, Capital One offered to acquire Discover in an all-stock deal valued at about $35 billion that has garnered tons of support from Wall Street and investors. Since the deal was announced, Capital One stock has soared 48%, while Discover has gained 62% through the end of January.

Now all that remains is regulatory approval.

"Capital One anticipates that the transaction will close in early 2025, subject to approval by the Board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency, and other customary closing conditions," the companies said in a press release.

BofA analysts are optimistic. "We believe that closing is the base case and, based on our investor conversations, failure to close would be a negative catalyst," they wrote.

Write to Emily Dattilo at emily.dattilo@dowjones.com

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February 19, 2025 11:37 ET (16:37 GMT)

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