In a report on Wednesday analysts at Morgan Stanley downgraded regional banker U.S. Bancorp (USB) as the stock approaches its fair value.

The analysts reduced its rating on USB from “Overweight” to “Equal-Weight” with a price target of $35. That valuation is +7.4% upside to Tuesday’s closing price of $32.57.

An analyst at Morgan Stanley commented, “Stock approaching fair value… currently trades at 1.5x 2014e P/B on 16% 2014 ROE. Higher capital return, lower earnings volatility largely priced in. Given USB has best in class efficiency ratios, it has less room to manage costs down from current levels relative to peers.”

U.S. Bancorp shares were down 16 cents, or -0.49%, during trading on Wednesday. The stock is up +20% year-to-date.

The Bottom Line
Shares of U.S. Bancorp (USB) have a 2.39% dividend yield, based on last night’s closing stock price of $32.57. The stock has technical support in the $29-$30 price area. If the shares can firm up, we see overhead resistance around the $34-$36 price levels.

U.S. Bancorp (USB) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.