Capital One rated buy as Discover deal boosts scale despite 27% stock drop YTD

Capital One's stock has fallen nearly 27% year-to-date amid its integration of Discover, which now gives it a 24% share of credit card revenue, surpassing Visa and Mastercard individually. The merger is expected to improve efficiency ratios, while credit risk concerns persist but show signs of stabilization in delinquency and charge-off rates. Analysts project a 2026 EPS of $21.00 and tangible book value of $122, implying a potential 34% upside at a 2x price-to-tangible book value multiple, supporting a positive investment outlook.