Fifth Third Bancorp Downgraded at FBR Capital (FITB)

in Gold Gold Investing by admin — March 8, 2010 7:09 am | no comments

Regional banker Fifth Third Bancorp ( FITB ) saw its rating downgraded on Monday by analysts at FBR Capital Markets. The analyst lowered its rating for FITB to “Market Perform” from “Outperform,” and set a $14 price target on the shares, which had closed at $12.73 on Friday. The firm noted that “Since our initiation on October 12, FITB shares have traded up 24% versus the S&P 500, which has increased 6%. As such, the reward profile of shares has shifted, and FITB is now a low-risk, medium-reward stock based on our Risk Adjusted Valuation (RAV) framework. FITB has taken a proactive stance in managing credit, which was demonstrated with its 4Q results that showed charge-off’s down 6%, driving an improvement in its 4Q risk profile in FBR’s Risk Index. We expect continued signs of stabilization in credit metrics at FITB, which will likely support valuation at current levels, though with credit costs likely to remain elevated and given our expectation that FITB will lose money in FY10 as a result, we do not expect much upside to valuation and opt to step to the sidelines until the ultimate level of profitability becomes more clear. We are leaving our FY10 and FY11 EPS estimates unchanged at ($0.20) and $0.95, respectively.” Fifth Third shares fell 10 cents, or -0.8%, in premarket trading Monday. The Bottom Line We have avoided shares of FITB since our early June 2008 coverage began, when the stock was trading at $16.74. The company has a .31% dividend yield, based on Friday’s closing stock price of $12.73. The stock has technical support in the $10 price area. If the stock can build on today’s pop, we see overhead resistance around the $15 price level. We would remain on the sidelines for now. Fifth Third Bancorp ( FITB ) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.1 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 .