Zacks Investment Research downgraded shares of U.S. Bancorp (USB) from OUTPERFORM to NEUTRAL on June 19, 2012, with a target price of $33.00.
We are downgrading our recommendation on U.S. Bancorp to Neutral based on a stretched operating environment which is likely to temper its growth momentum in the quarters ahead. The company's first-quarter 2012 earnings were ahead of the Zacks Consensus Estimate, driven by year-over-year growth in revenue, supported by increases in net interest income as well as fee-based revenue, and reduced credit costs. Its core franchisee is attractive and the diverse revenue stream is encouraging. The company's solid capital position, improving credit quality and increase in lending activities also augur well. Moreover, the stress test clearance along with the company's capital redeployment efforts gives a fillip to investors' confidence. Yet, a tepid economic recovery, regulatory issues along with the expectation of continued low interest rate environment are projected to limit the stock's upside potential in the upcoming quarters.
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