February 06, 2013 at 10:38 AM EST
Nomura Securities Initiates Coverage on U.S. Bancorp with a “Buy” Rating (USB)

A Nomura Securities analyst said on Wednesday that they are starting financial service company U.S. Bancorp (USB) off with a “Buy” rating.

The analyst also stated that USB has a $38 price target, which suggests about a 15% upside to Tuesday’s closing price of $33.13.

Nomura Securities analyst Keith Murray commented, “US. Bancorp is a consistently solid performer with a diverse business mix that produces best-in-class returns (16% ROE, 165bps ROA in 2012). While we expect USB’s revenue growth to slow on softer mortgage revenues and continued NIM pressure, we still expect USB to post mid- to high-single-digit EPS growth in the next two years as management controls costs (expect 100bps of operating leverage in 2013) and the share count shrinks via continued buybacks. The stock is at a premium to the group on P/B, but a discount on a P/E basis (10x 2014E vs. the group at 11.3x). We believe the stock should trade more in line with the group. FY13E EPS at $3.11; FY14E EPS at $3.3.”

U.S. Bank shares were up slightly during morning trading on Wednesday. The stock is up about +14% over the trailing twelve months.

The Bottom Line
Shares of U.S. Bancorp (USB) have a dividend yield of 2.35% based on Wednesday’s intraday trading price of $33.15 and the company’s annualized dividend payout of 78 cents per share.

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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