Shares of Capital One Financial Corp. rose Tuesday after an analyst upgraded the credit card company, saying recent dips in valuation now largely reflect the difficult operating environment.
The stock gained $2.13, or 5.6 percent, to $40.14 Tuesday.
UBS Investment Research analyst Eric E. Wasserstrom upgraded the McLean, Va., company to "Neutral" from "Sell."
The upgrade was part of a broader look at the credit-card sector, including American Express Co. and Discover Financial Services
"Although we believe the near-term catalysts remain mostly negative ... we view current valuations as generally consistent with these expectations," Wasserstrom said in a note to clients.
Shares of Capital One have slipped 20 percent so far this year.
Yet, he said, Capital One "remains the stock with the most near-term downside risk because of continued credit weakness in the card portfolio reflecting higher unemployment, and more severe deterioration in the auto portfolio reflecting poor underwriting."
Wasserstrom cut his price target to $39 from $46, implying he expects the stock to rise about 3 percent over Monday's $38.01 close.
A company representative was not immediately available for comment.
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