On Thursday, Keefe, Bruyette & Woods adjusted their outlook on U.S. Bancorp (NYSE:USB) shares by reducing the price target from $54.00 to $49.00. The firm retained its Market Perform rating on the banking institution. The decision was influenced by a mix of performance results and future revenue projections.
In their analysis, Keefe, Bruyette & Woods acknowledged U.S. Bancorp’s solid performance in the recent quarter, which surpassed pre-provision net revenue (PPNR) expectations by $0.02. This success was attributed to higher net interest income (NII) and fee income. However, the payments revenue did not meet the anticipated figures, and the fee income boost was primarily due to lower servicing amortization and other income.
Despite the positive quarter, the firm noted that the favorable results are not expected to extend into the upcoming quarter, based on guidance provided for the second quarter of 2025. This outlook has contributed to the decision to maintain the Market Perform rating, as analysts await clearer indications of growth in the payments sector.
U.S. Bancorp’s current valuation was highlighted as comparatively inexpensive, trading at roughly 8 times the firm’s estimated 2026 earnings and 1.2 times tangible book value (excluding accumulated other comprehensive income, or AOCI). Keefe, Bruyette & Woods underscored the need for more visibility on the potential for improved growth in payments revenue, which is critical for their assessment. Management’s full-year guidance suggests an expectation for a 5% revenue growth in the second half of 2025 compared to the first half.
In other recent news, U.S. Bancorp reported its first-quarter 2025 earnings, with earnings per share (EPS) of $1.30, exceeding the forecasted $0.98. Revenue reached $6.96 billion, slightly surpassing expectations of $6.91 billion. Despite this positive earnings surprise, Raymond James adjusted its outlook, reducing the price target to $51.00 from $57.00 while maintaining an Outperform rating. Meanwhile, Wells Fargo lowered its price target for U.S. Bancorp to $50.00 from $56.00 but kept an Overweight rating, citing improved costs, credit, and capital. JPMorgan maintained an Underweight rating with a price target of $43.50, noting the company’s small loan loss reserve release and fluctuations in mortgage servicing rights amortization expenses. U.S. Bancorp’s credit conditions improved, with nonperforming assets decreasing by 6% and net charge-offs down by 1 basis point. The bank also launched a new product, BankSmartly, targeting affluent customers. Overall, these developments reflect U.S. Bancorp’s strategic direction amid economic uncertainties.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.