December 31, 2012 at 09:21 AM EST
Citigroup Lowers Price Target on U.S. Bancorp (USB)

Citigroup reported on Monday that they have reduced their price target for financial services company, U.S. Bancorp(USB) .

The firm announced that they have maintained their “Neutral” rating on USB, and have lowered their price target from $37 to $36. This price target suggests a a 12% increase over the stock’s current price of $31.68.

An analyst from the firm commented, “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 shares were mostly flat during premarket trading Monday. The stock is up 17% YTD.

The Bottom Line
Shares of U.S. Bancorp (USB) have a 2.46% dividend yield, based on Friday’s closing stock price of $31.68. The stock has technical support in the $29-$30 price area. If the shares can firm up, we see overhead resistance around the $33-$34 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.

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