UPDATE: ISI Group Initiates Coverage on U.S. Bancorp on Good Execution, Limited Leverage

In a report published Tuesday, ISI Group analyst Keith Murray initiated coverage on U.S. Bancorp USB with a Neutral rating and $39.50 price target. In the report, ISI Group noted, “We are initiating coverage of U.S. Bancorp with a Neutral rating and 12-month price target of $39.50. USB is one of the most consistent performers among the regional banks and it consistently posts best-in-class ROAs and ROEs. We see no reason that this consistency will change (we are not overly concerned by USB going down the credit curve a bit in auto given its history in the business), but we think EPS growth will come in below management's long-term target of 8-10% next year given the slow macro recovery and limited leverage from credit and expenses. While we don't see much downside in the shares (USB is viewed as a relatively defensive name) we don't expect to see much multiple expansion over the next 12 months (stock already at close to 11x our 2015E and 2.7x tangible book value).” U.S. Bancorp closed on Monday at $36.13.