January 30, 2013 at 10:14 AM EST
JP Morgan Downgrades U.S. Bancorp to “Neutral” as Revenue Growth Expects to Slow (USB)

On Wednesday analysts at JP Morgan downgraded finacial services firm U.S. Bancorp (USB) as the benefits of mortgage revenue growth because of low rates seems to be almost over.

The analysts downgraded USB from “Overweight” to “Neutral” and lowered its price target from $39.50 to 37.50 The new valuation suggest a +12.5% upside to Tuesday’s closing price of $33.33.

A JP Morgan analyst said, “Revenue growth in the industry is slowing due to low rates and tough fee revenue comps in 2013. USB has benefited from the crisis by growing additional businesses to drive revenue growth faster than peers over last couple of years – notably mortgage originations, which offset slowdown in payments processing fee growth. As these new businesses mature and mortgage origination revenues decline, USB’s revenue growth is slowing and we expect the gap in revenue growth for USB to narrow versus peers. In addition, USB is already the leader in efficiency ratio and has limited room to make large expense cuts.”

U.S. Bank shares were down 37 cents, or -1.11%, during morning trading on Wednesday. The stock is up +17.6% over the past year.

The Bottom Line
U.S. Bancorp (USB) share have a dividend yield of 2.34% based on last night’s closing price of $33.33.

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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