Shares of Capital One Financial (COF) are sliding after Bank of America Merrill Lynch downgraded the stock to Underperform, a rating equivalent to sell, following the company's quarterly results. BofA Merrill analyst Kenneth Bruce viewed the results as disappointing and voiced concerns over the risks posed by sub-prime growth. Conversely, Sandler O'Neill upgraded Capital One to Buy, saying that its loan growth continues to outpace peers. 

BOFA SAYS SELL: BofA Merrill's Bruce downgraded Capital One to Underperform from Neutral and lowered his price target on the shares to $69 from $71. The analyst said Capital One reported "disappointing" first quarter results on weaker revenues and higher provisions and said he is increasingly concerned that sub-prime credit card growth could drive higher losses than is currently factored into expectations or maintained guidance. Bruce sees little upside in the stock as visibility worsens and credit metrics highlight a more cautious backdrop for cyclical stocks. 

SANDLER SAYS BUY: Conversely, Sandler O'Neill analyst Christopher Donat upgraded Capital One to Buy from Hold and raised his price target on the stock to $88 from $73 despite the company's first quarter GAAP earnings per share coming in below estimates. The analyst believes loan growth should outshine energy concerns and said the larger than expected $1.5B provision should push some credit concerns to the side. Donat noted that Capital One's U.S. card loan growth continues to outpace peers and that the company's maintained the efficiency rate guidance even as it is undertaking $160M of incremental spending on branch optimization in 2016. 

BUYING OPPORTUNITY: Also positive on Capital One following results was Citi analyst Donald Fandetti, who recommended using the stock's post-earnings selloff as a buying opportunity. While the analyst is trimming Capital One's estimates on risk of further energy reserve build, he noted that the core card and auto businesses performed "quite well" this quarter, with the reserve build in cards less than expected. Fandetti raised his price target on the shares to $85 from $75 and kept a Buy rating on the name.

RESULTS: Yesterday, Capital One reported Q1 EPS of $1.85, below consensus estimates of $1.91, and Q1 revenue of $6.22B, above consensus expectations of $6.16B. Pre-provision earnings increased 10% to $3B, while provision for credit losses increased 11% to $1.5B.

PRICE ACTION: In late morning trading, Capital One's stock fell more than 3% to $73.50 per share.