UPDATE: Sterne Agee Downgrades CapitalSource to Neutral on Valuation

Sterne Agee reduced its rating on CapitalSource

from Buy to Neutral with a reiterated $7.50 price target. Sterne Agee noted, "The stock has reached our price target of $7.50 and we are reducing our rating from BUY to NEUTRAL. The company has successfully recaptured its DTA into book value and aggressively used excess holding company cash to buy back stock and pay off higher cost debt. Loan growth at the bank level should remain robust and trends in credit favorable." CapitalSource closed at $7.52 on Tuesday.