Raymond James Upgrades U.S. Bancorp (USB) to Outperform

Raymond James analyst Michael Rose upgraded U.S. Bancorp (NYSE: USB) from Market Perform to Outperform with a price target of $57.00.

The analyst comments "We are upgrading shares of USB to Outperform from Market Perform and initiating a $57 price target. After seven straight quarters of negative EPS revisions, USB has now exceeded our forecast for two straight quarters and is coming off an encouraging Investor Day in September. However, its stock price performance has performed only in-line with that of the BKX since mid-year after dramatically underperforming in 1H24. Despite producing negative operating leverage in five of the last six years, we believe the bank is poised for positive operating leverage in 2025 and 2026. We also expect the team to become more cautious in providing its initial 2025 outlook next month after experiencing consistent negative revisions for some time. We believe positive fundamental momentum will continue with a stable-to-rising NIM combined with rising fee-based revenue, led by payments and investment management. Additionally, combining the bank’s ability to quickly increase capital and its plan to evade becoming a Category II bank (above $700 billion in assets) until at least 2027, share repurchases returned in 4Q at a higher level than previously expected and should continue. To sum, we believe USB is well-positioned to improve its operating leverage and produce superior profitability metrics due to its attractive business mix. We believe the company can perform well in this “show-me” phase that the company/stock seems to have entered."

For an analyst ratings summary and ratings history on U.S. Bancorp click here. For more ratings news on U.S. Bancorp click here.

Shares of U.S. Bancorp closed at $47.61 yesterday.

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