(Bloomberg) -- Shares of Capital One outperformed on Wednesday after the company reported better-than-expected fourth-quarter results, helping lift shares of other card and payments stocks.

Though analysts cheered Capital One’s earnings, they warned about a lack of clarity regarding the impact of new accounting rules known as CECL.

Capital One rose as much as 4.6% to a record high, while Discover Financial Services rallied 2.3%, the most since mid-December; Visa Inc. and Mastercard Inc. both climbed more than 1.3% to records, and PayPal Holdings Inc. added 1.1% to reach the highest since July and Square Inc. gained 2.5%.

Here’s a sample of the latest commentary:

Credit Suisse, Moshe Orenbuch

Positives included lower-than-expected provisions “due to better-than-expected reserve build across all segments, particularly in credit card,” while executives continue to cite “stable and strong credit in the credit card business,” Orenbuch wrote in a note. Net interest margin, or NIM, of 6.95% also topped Credit Suisse’s estimate of 6.68%.

Higher-than-estimated operating expenses were among negatives, along with domestic card loan growth that trailed Orenbuch’s estimate, he said, adding that “day-two impact of CECL remains to be seen.”

He also said that “loan growth has been stable, but not accelerating,” though growth may speed in 2020. Orenbuch rates Capital One shares outperform, with a target of $125.

KBW, Sanjay Sakhrani

“It was a constructive quarter overall, though there is still a lot of uncertainty around Capital One’s day-two CECL impact,” Sakhrani wrote. He added that KBW takes “comfort in the reaffirmed operating efficiency outlook and the fact that the company is on track to exit its data centers by year-end, which should lead to meaningful earnings growth at the end of 2021.”

Sakhrani rates the stock outperform and lifted his price target to $120 from $116.

Morgan Stanley, Betsy Graseck

“Not all card portfolios are created equal,” Graseck wrote, noting that Capital One was raising reserves for its card portfolio by 42%, less than the roughly 100% increase that JPMorgan Chase & Co. booked for CECL, and that it “highlighted recoveries as a key ingredient in the tempering of the increase.”

She added that so far Capital One was the only bank she covers that boosted reserves on its commercial loan book. “It’s hard for us to see why, as the existing reserve ratio against commercial loans seems high, losses are moderate and yields look similar to other commercial lenders,” she said. That “makes the case for more disclosure from banks,” she said, adding that “estimating day-two CECL reserves is still more art than science.”

Nomura Instinet, Bill Carcache

A “strong finish to 2019 bodes well for 2020,” Carcache wrote in a note. “we were positively surprised by the strength of this quarter’s results, and expect positive estimate revisions to drive shares higher.”

He added that CECL day-two headwinds are likely “already contemplated in consensus expectations,” noting Capital One estimates a day-one increase of 40%, driven by a 42% increase in credit card, 48% in consumer banking and 13% in commercial banking loan loss reserves.

He added that Capital One’s NIM gain compared with the prior quarter contrasted with compression at the more asset-sensitive regional banks that have reported so far.

Carcache rates shares neutral, and raised his target price to $111 from $108.

Bloomberg Intelligence, David Ritter

“Capital One’s organic loan and revenue growth may pick up slightly to the mid-single digits in 2020, driven by recent card-account gains and credit-line increases, but the performance of the new Walmart card program remains a key unknown. Management hasn’t provided any growth expectations, but the Walmart-only card portfolio may continue to shrink quickly as marketing focuses on the new Walmart Mastercard that pays 5% back for purchases online at the retailer.

Despite enduring strength in loan growth and margin in 4Q, Capital One noted tougher rivalry in auto and commercial lending, which we believe may hurt gains in 2020. Provision-expense estimates for 2020 may narrow now that management has shared details of its approach to CECL, the new credit-loss-reserve accounting method that started Jan 1.”

To contact the reporter on this story: Felice Maranz in New York at fmaranz@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Debarati Roy

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