UPDATE: Goldman Sachs Cuts U.S. Bancorp (USB) from CL-Buy to Neutral; Risk/Reward Viewed as Balanced
- Top 10 News for 5/18 - 5/22: Fed Rate Hike Pushed Back; Icahn Calls for More Apple Buybacks; Big Banks Settle FX Probe
- Yellen Says Rate Hike at Some Point This Year 'Appropriate'
- Deere & Co. (DE) Posts Q2 EPS of $2.03; Lowers Equipment Sales Outlook for FY15
- Hewlett-Packard (HPQ) Tops Q2 EPS by 1c; Guides Q3 EPS to Low-Side of Expectations
- Foot Locker (FL) Tops Q1 EPS by 7c
(Updated - April 3, 2014 8:56 AM EDT)
Goldman Sachs downgraded U.S. Bancorp (NYSE: USB) from CL-Buy to Neutral with a price target of $45.00 (unchanged).
Analyst Richard Ramsden said, "From a fundamental perspective, we expect USB to see outsized top-line growth in 2014 from (1) an improving capex cycle (C&I loan growth), (2) declining consumer savings rates/accelerating consumer expenditures (consumer payments businesses) and (3) improving government spending (corporate payments businesses). While consensus likely reflects an improving C&I picture, we believe the market is underestimating leverage to the payments side of the business (28% of revenue, coming off a challenging 2013). Furthermore, in a morenegative macro scenario, we feel confident that USB can control the expense line and generate positive operating leverage even without top-line growth."
"That said, with shares up 6% YTD relative to slightly negative EPS revisions, USB now trades at 12.2x 2015E EPS vs. sub-10.0x for money-center banks, 11.5x super-regionals and 12.1x for regional banks. While we believe that this premium multiple is justified by USB’s business mix, leading return on capital and minimal EPS volatility, we view the risk/reward skew at current valuation as relatively balanced," he added.
Shares of U.S. Bancorp closed at $43.05 yesterday.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Aeropostale (ARO) PT, Estimates Cut at Jefferies Following Weak Results
- Wedbush Remains Sidelined Following L Brands (LB) 1Q
- UPDATE: Canaccord Genuity Starts Synergy Pharmaceuticals (SGYP) at Buy, PT $11
Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS View, Downgrades
Related EntitiesGoldman Sachs Conviction Buy List, Goldman Sachs
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!