UPDATE: Credit Suisse Downgrades Fifth Third Bancorp on Lower EPS Upside

In a report published Tuesday, Credit Suisse analyst C. Siegenthaler downgraded Fifth Third Bancorp FITB from Outperform to Neutral, but reiterated the $21.25 price target.

In the report, Credit Suisse noted, “We are downgrading FITB to Neutral from Outperform and maintaining our 21.25 TP which implies 10% upside. Our TP is 11.4x our '15 EPS estimate which is the same multiple that we apply to the other LC Regional Banks. Our 2014/2015 EPS estimates of 1.62/1.87 compare to the consensus of 1.73/1.89. We estimate modest downside to long-term consensus EPS expectations as the cyclical decline in mortgage banking revenues accelerates. Additionally, on a longer-term basis, we estimate that FITB's lower (1) net asset sensitivity and (2) excess capital (slightly lower than peers under new Basel 3 definition) will limit ROTE expansion as (1) ST rates rise, and (2) US regulators allow for increased capital deployment in the upcoming CCARs (annual stress tests).”

Fifth Third Bancorp closed on Monday at $19.27.