Bank of America Securities analyst Ebrahim Poonawala reiterated a Buy rating on US Bancorp yesterday and set a price target of $54.00.
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Ebrahim Poonawala has given his Buy rating due to a combination of factors that highlight the potential for US Bancorp’s stock to outperform. Despite recent challenges in management’s communication and a slight underperformance compared to peers, the bank’s strong franchise potential remains evident. The bank benefits from being the largest regional bank in the country, which provides scale advantages, and it has a well-diversified fee revenue mix that constitutes a significant portion of its income.
Furthermore, the stock is currently trading at a lower price-to-earnings ratio compared to its peers, suggesting an attractive risk/reward profile, especially if the net interest margin improves as projected. The bank’s capital position is expected to strengthen, and with anticipated double-digit EPS growth and improving return on assets, there is potential for stock outperformance. However, improved execution and communication from management are necessary to fully realize this potential. The momentum in fee income growth, supported by management’s guidance, also adds to the positive outlook for US Bancorp.
In another report released today, Barclays also maintained a Buy rating on the stock with a $56.00 price target.
Based on the recent corporate insider activity of 39 insiders, corporate insider sentiment is positive on the stock. This means that over the past quarter there has been an increase of insiders buying their shares of USB in relation to earlier this year.