Bank of America Merrill Lynch Has Buy On Capital One

Bank of America Merrill Lynch is out with a research report on Capital One Financial Corp.

after it bought a credit card portfolio from HSBC

. It has a Buy rating and a $63 price target on shares. In a note to clients, Bank of America Merrill Lynch writes, "Capital One announced that it has agreed to acquire HSBC's U.S. credit card operation a premium of $2.6B. The move solidifies COF's position as the #4 general purpose credit card issuer and vaults it to the #3 position in private-label in the U.S. The news confirms earlier reports that Capital One and HSBC were close to a deal. Investors had anticipated a transaction between COF and HSBC, largely along the terms identified, so the deal is likely to be viewed positively. The action also supports the view that COF's earlier ING Direct acquisition was an incremental step toward a more accretive, albeit more complicated, asset purchase. COF expects the deal to generate high-teen EPS accretion by 2013." Shares of COF gained 28 cents yesterday to close at $41.05, a gain of 0.69%.