Compass Point Maintains PT, Rating On FITB

Compass Point is maintaining its $19 price target and its Buy rating on Fifth Third Bancorp FITB, citing improved outlook on the stock. According to Compass Point, “We reiterate our $19 price target and our buy rating on shares of FITB. We are reducing our 2011E EPS from $1.13 to $0.88 and our 2012E EPS from $1.55 to $1.54. Driving this reduction in 2011 estimates is the charge related to repaying TARP and lower corporate banking income which is offset by lower non_interest expenses. Driving our slight 2012 reduction is lower net interest income (NII) due to a competitive rate environment, which is offset by lower expenses. Management was very positive on future net interest margin (NIM) expansion and loan growth. We believe this loan growth is attainable in an input price inflationary environment, which is evidenced in the ISM prices paid index. Trading at 9.0x our “normalized” earnings estimate and 7.5x our “normalized” earnings estimate including significant share buybacks we view shares of FITB as extremely attractive. We believe this is particularly true given their clarity into “normalized” earnings, beneficial loan mix towards manufacturing growth, and being positioned for a rising rate environment.” FITB closed yesterday at $13.05.