Analyst: These 2 Financial Services Stocks Are a "Buy"

Options traders are having opposite reactions to COF and DFS

Fernanda Horner

Digital Content Manager

Dec 6, 2023 at 10:33 AM

BofA Global Research chimed in on two financial services names earlier today: Capital One Financial Corp. (NYSE:COF) and Discover Financial Services (NYSE:DFS). Both received upgrades to "buy" from "neutral," with the former's price target raised to $129 from $112, and the latter to $116 from $94. The analyst in coverage noted valuation as a catalyst for the bull notes.

COF was last seen up 2.1% at $117.77, and earlier hit its highest level since July. It remains to be seen whether or not the equity can conquer the $118 level, which turned down its latest peak. Now on track for its seventh-straight daily gain, the stock sports a 26.4% lead for 2023.

DFS is up 5.7% at $104.73 at last check, and pacing for its first close above the 320-day moving average since August. The shares are on track for their best day since November 2022, and have added 20.8% so far this quarter.

The options pits are having opposite reactions to each name. Bears are favoring COF, with 5,126 puts exchanged so far today, or four times the intraday average amount. The March 105 put is most popular, with positions opening there. Meanwhile, 3,363 calls have been traded for DFS, volume that is seven times the amount typically seen at this point. The weekly 12/8 104-strike call stands out as most active, with positions being opened there.

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