UPDATE: Citigroup Reiterates Neutral Rating, Lowers PT on U.S. Bancorp
In a report published Monday, Citigroup reiterated its Neutral rating on U.S. Bancorp (NYSE: USB), but slightly lowered its price target from $37.00 to $36.00.
Citigroup noted, “We lower our 2013 and 2014 estimates mostly on higher credit costs as we are now factoring in the LLR ratio bottoms closer to 2.0%, based on recent comments made by mgmt at a competitor conference. Our 2013 estimate falls 10c to $3.05 from $3.15 (vs consensus of $3.08) and our 2014 estimate falls 5c to $3.15 from $3.20 (vs consensus of $3.32). Similar to other banks in our universe, we continue to believe the 2013 consensus EPS estimates are achievable, but do see downside to 2014 EPS estimates largely due to NIM contraction. With USB continuing to generate ~20% ROTE combined with mid single digit earning asset growth and limits on capital return, our estimates translate into its Basel 3 Tier 1 common ratios rising to 9% by the end of 2014. This leaves USB in a strong position with excess capital, which could be deployed through M&A and provide upside to our estimates.”
U.S. Bancorp closed on Friday at $31.68.
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