On Thursday, DA Davidson adjusted its stance on U.S. Bancorp (BVMF:USBC34) (NYSE: USB), reducing the price target from the previous $54.00 to $49.00, yet retaining a Buy rating on the company’s shares. The bank, currently trading at $38.47 with a market capitalization of $59.89 billion, appears undervalued according to InvestingPro Fair Value analysis. The move comes as U.S. Bancorp welcomes Gunjan Kedia as its new CEO and President since April 15. Kedia’s leadership is expected to focus on regaining the bank’s premium valuation, a goal she is determined to achieve with a strong sense of urgency.
The newly appointed CEO has made a commitment to meet the medium-term profitability goals that were set during the investor day in September 2024. These targets are to be reached regardless of the prevailing economic conditions. Trading at a P/E ratio of 10.14 and offering an attractive dividend yield of 5.29%, U.S. Bancorp maintains a strong financial position. InvestingPro subscribers can access 8 additional key insights about the company’s financial health and growth prospects. Additionally, Kedia aims to deliver a 200 basis point improvement in operating leverage (POL) by 2025. This would be a significant achievement for U.S. Bancorp, considering that since 2016, the company has only reported a POL greater than 0.5% once, and it has been negative in six of those years.
DA Davidson’s analyst noted that in light of the uncertain economic environment, U.S. Bancorp is prepared to manage its expenses accordingly should revenue fall short of forecasts. This pragmatic approach is seen as a necessary strategy to navigate potential financial headwinds while striving to achieve the outlined profitability targets.
The analyst’s commentary underscores the bank’s recognition of the challenges ahead and its willingness to adapt its expense management to maintain financial stability. Despite the lowered price target, the firm’s Buy rating suggests a continued positive outlook on U.S. Bancorp’s stock performance as the company embarks on its new strategic direction under Kedia’s leadership. For deeper insights into U.S. Bancorp’s valuation and comprehensive analyst coverage, access the full Pro Research Report available on InvestingPro.
In other recent news, U.S. Bancorp reported its first-quarter earnings for 2025, revealing an earnings per share (EPS) of $1.30, which exceeded the forecasted $0.98. Revenue for the quarter reached $6.96 billion, slightly above the expected $6.91 billion. Despite this positive earnings surprise, the company’s stock experienced a pre-market decline, reflecting broader market uncertainties. Analysts from Keefe, Bruyette & Woods adjusted their price target for U.S. Bancorp to $49, maintaining a Market Perform rating, citing mixed performance results and future revenue projections. Wells Fargo also revised its price target to $50, while keeping an Overweight rating, noting challenges in sustaining growth amidst flat costs. JPMorgan maintained an Underweight rating with a $43.50 target, highlighting issues such as fluctuations in Mortgage Servicing Rights (MSR) amortization expenses and a potential increase in net interest margin. Raymond James lowered its price target to $51, reaffirming an Outperform rating, and commended U.S. Bancorp for its positive operating leverage and strategic direction amid economic uncertainties. These developments reflect a cautious yet optimistic outlook from analysts regarding U.S. Bancorp’s future performance.
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