Sept 9 (Reuters) - Fifth Third Bancorp (FITB.O) may not show a profit until 2011, but the rebound in shares to the $10 level reflects the fact that the bank’s survivability is no longer in question, veteran banking analyst Richard Bove said. Still, it may be premature to initiate new positions at this time, Rochdale Securities’ Bove said, and began coverage of the stock with a “neutral” rating and $11 price target. He expects the large U.S. regional bank to earn 86 cents per share in 2009. Bove estimates the company will post a loss of 11 cents a share in 2010.
“It will be some time before this bank is ready to strike out seeking higher revenues,” Bove said. “At this moment, it is a defensive game,” he added.
Last month, Fifth Third, in a regulatory filing, said it expects continued stress in its commercial construction portfolio throughout this year, and that its home equity loan portfolio was experiencing high loss severity. [ID:nWNBB4266]
Shares of the bank were up 3 cents in pre-market trade Wednesday, after closing at $10.53 Tuesday on Nasdaq. (Reporting by Tenzin Pema in Bangalore; Editing by Himani Sarkar)