Piper Jaffray Cuts Price Target on U.S. Bancorp (USB) Following Investor Day
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Piper Jaffray maintained an Overweight rating on U.S. Bancorp (NYSE: USB), and cut the price target to $46.00 (from $47.00), following the company's investor day. USB laid out long-term targets that implied 8-10% EPS growth, compared to street estimates for 6% average growth over the next two years. However, management did not commit to generating operating leverage without seeing rates move higher and did not expect to achieve these targets until 2018.
Analyst Kevin Barker commented, "We reiterate our Overweight rating and adjust our price target to $46 from $47 following the USB investor Day. We are also adjusting our 3Q16E, FY17E and FY18E EPS slightly lower due to management’s comments regarding slowing loan growth and lower NIM. The near-term headwinds the company is facing regarding loan growth is a theme we have heard from many banks this quarter, but the decline in NIM was slightly more than expected (3-4 bps) given positive commentary we have heard following the move higher in LIBOR. In addition, the company slightly lowered its long-term growth targets for fee income, but stuck with its 8-10% EPS growth target. These long-term targets assume higher rates and thus, we currently estimate annual EPS growth of 4% through FY18. Overall, we continue to believe USB remains well positioned to generate above average risk-adjusted returns despite near-term headwinds related to regulatory requirements."
Shares of U.S. Bancorp closed at $43.03 yesterday.
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