Compared to its peers, banking group U.S. Bancorp’s (USB) shares have only grown about 6% (as of afternoon trading on Wednesday) since the start of the year. This is even as the financial services company has had to battle several headwinds.
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However, Truist’s (TFC) investment research unit on Wednesday raised its price target on U.S. Bancorp’s stock to $51, up from $49. This is even though its analyst, John McDonald, stuck to his Hold rating on the lender’s shares.
Truist explained that despite challenges that have left U.S. Bancorp “behind the curve”—or lagging behind its peers—its management appears set to improve the company’s performance by meeting goals laid out during its September 2024 investor day. Some of these goals include boosting its operating leverage, strengthening its fee income, and rebuilding investor confidence.
How U.S. Bancorp Got “Behind the Curve”
According to Truist, a key reason for U.S. Bancorp’s underperformance relative to others in the sector is its lengthy acquisition process of MUFG Union Bank in 2022. The acquired regional banking franchise was previously owned by Japan’s Mitsubishi UFJ Financial Group (MUFG).
Also, other factors Truist pointed to include the banking group’s weaker performance over previous interest rate hiking cycles, and the weak growth in its pre-provision net revenue, which is the bank’s core earnings before accounting for potential losses on loans.
Are U.S. Bancorp’s Earnings Sustainable?
In the recent Q2 2025 results, Bancorp’s total fee revenue—income U.S. Bancorp earns from non-interest sources like payment services, wealth management, and account fees—rose 4% from the same period last year. The U.S. company also reported an earnings per share of $1.11, which is a 13% year-over-year growth.
However, its net interest margin, a key measure of lending profitability, dropped by six basis points from the previous quarter. This metric measures the difference between what U.S. Bancorp earns on loans and other interest-generating assets versus what it pays on deposits.
Half of the fall in this figure was attributed to temporary factors. The decline was also linked to the corporation spending more to retain deposits, as customers shifted to higher-yield products.
Some bearish analysts have expressed concerns about the sustainability of U.S. Bancorp’s earnings due to this trend. Furthermore, Wall Street bears now expect Bancorp’s net interest margin to drop below its 3% goal in the near future due to the unfavorable shift in its deposit mix over the past decade.
Is U.S. Bancorp a Good Stock to Buy?
Across Wall Street, U.S. Bancorp’s shares have a Moderate Buy consensus recommendation based on 13 Buys, three Holds, and one Sell assigned by 17 Wall Street analysts over the past three months.
The average USB price target of $54.44 suggests a 10.22% growth potential from its current level.
