BMO Expects Fifth Third To Pump The Brakes On Buybacks

In its report published Wednesday, BMO Capital provided its expectations on Fifth Third Bancorp

's share buybacks. According to the analysts, the share buybacks will slow to $50 million in the second quarter of 2016 down from $245 million in the first quarter, however mentioning that there should still be a meaningful reduction in average shares since most of the buybacks in 1Q took place at the end of the quarter. "Under its 2016 CCAR, FITB was approved for a share buyback of up to $660 million (including $84 million related to its employee benefit plans), and the ability to repurchase shares from gains on the sale of Vantiv stock, including the tax receivable agreement." mentioned BMO. The analysts lowered their 2017 EPS estimate by 3 percent to $1.68, while keeping the 2016 estimate unchanged at $1.61. The analysts assume no Fed rate hike through the end of 2017, compared to 4 hikes estimated previously, and a flatter yield curve. They kept the Market Perform rating unchanged, but reduced the one-year price target to $19 from $20, based on 12x 2017 EPS multiple and 10% discount rate.