JPMorgan cuts U.S. Bancorp stock rating to underweight

On Thursday, JPMorgan analysts downgraded U.S. Bancorp (BVMF:USBC34) shares, moving the rating from Neutral to Underweight and reducing the price target to $43.50 from the previous $51.00. The downgrade reflects concerns that the current economic climate will have a more significant negative impact on the company compared to its peers. Currently trading at $43.01, InvestingPro analysis suggests the stock is slightly undervalued, with a P/E ratio of 11.28 and an attractive PEG ratio of 0.72.

U.S. Bancorp’s strategy to expand into Investment Banking and its considerable payments business are among the areas expected to be affected by reduced consumer spending. Despite generating substantial revenue of $25.1 billion in the last twelve months, the bank’s considerable payments business and substantial credit card loan portfolio, which typically has higher loss rates, are seen as vulnerabilities in the face of economic headwinds. InvestingPro data reveals the company maintains a FAIR financial health score, with additional insights available in the comprehensive Pro Research Report.

The new price target set by JPMorgan represents a downward revision, indicating a cautious outlook for the bank’s stock performance. The analysts’ comments suggest that the combination of U.S. Bancorp’s business focus and the broader economic environment could pose challenges in the near term.

Investors are advised to consider the potential risks associated with U.S. Bancorp’s growth strategy and credit exposure. The bank’s push into investment banking and payments, coupled with the size of its credit card loans, are key factors that influenced JPMorgan’s decision to downgrade the stock.

As the market processes this update from JPMorgan, U.S. Bancorp’s stock may reflect the revised expectations and sentiment. For income-focused investors, the bank offers a notable 4.65% dividend yield and has raised its dividend for 14 consecutive years. Shareholders and potential investors should monitor the company’s performance closely, especially in relation to these identified areas of concern. Access deeper insights and additional ProTips through InvestingPro’s comprehensive analysis tools and research reports.

In other recent news, U.S. Bancorp has been the focus of several significant developments. Wolfe Research recently upgraded U.S. Bancorp’s stock rating to Outperform, with analyst Bill Carcache setting a price target of $49.00. This upgrade follows a meeting where the company’s new CEO, Gunjan Kedia, presented her strategic vision. Meanwhile, Citi analysts maintained their Buy rating on U.S. Bancorp, with a consistent price target of $65.00, anticipating a 3.5% revenue growth and a substantial increase in operating leverage.

In terms of corporate governance, Kimberly J. Harris, a board member, resigned due to health reasons, as disclosed in a recent SEC filing. Furthermore, U.S. Bancorp announced regular dividend payments, including a quarterly dividend of $0.50 per common share, payable in April 2025. In a more somber development, U.S. Bancorp reported a plane crash involving a private company plane linked to Terrance R. Dolan, the bank’s Vice Chair and Chief Administration Officer, with confirmation of his presence on board pending.

These events mark a period of both strategic and operational changes for U.S. Bancorp, as the company continues to address challenges and opportunities in the financial sector.

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