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Shares of U.S. Bancorp Surge as Analysts Become Optimistic Following Q2 Earnings Report

Key Points

  • Shares of U.S. Bancorp rose 6.46% after the Q2 earnings report, with the successful capital ratio raise being the main reason for the buying spree.
  • Raymond James, Goldman Sachs, and Wedbush upgraded their ratings or raised price targets for U.S. Bancorp.
  • U.S. Bancorp is classified as a super-regional bank, with diversified revenue streams from various business lines.
  • While Wall Street expects a 2% decline in earnings in 2023, investors are more focused on capital build rather than just earnings growth.
  • There are five stocks that analysts like better than U.S. Bancorp.

Analysts have recently expressed optimism about the potential of U.S. Bancorp (NYSE: USB), highlighting that the shares have been undervalued as investors focused on capital requirements.

Following the second-quarter earnings report, U.S. Bancorp shares climbed 6.46% in heavy volume on July 19. Although the results were in line with expectations, investors were pleased with the successful raise of the common-equity tier 1 (CET1) capital ratio.

The boost in CET1 capital ratio, achieved earlier than expected, addressed investor concerns about the bank’s capital levels.

Following the earnings report, Raymond James, Goldman Sachs, and Wedbush either raised their price targets or upgraded their ratings for U.S. Bancorp.

The consensus view of the stock is “moderate buy,” with a price target of $48.47, representing a potential upside of 23.85%.

The stock has shown significant growth, returning 17.76% in the past month and 9.39% in the past three months. This rally started in early May, with the stock gradually trending higher.

In the most recent quarter, U.S. Bancorp earned $1.12 per share, a year-over-year increase of 3%. Its revenue also increased by 19% to $7.141 billion.

Bank of America upgraded the stock to “buy” on July 11, highlighting U.S. Bancorp’s strong execution and superior EPS growth potential. Morningstar also noted that despite an average quarter, U.S. Bancorp shares have been undervalued.

Analysts were pleased with the guidance provided by the company regarding the capital build process.

U.S. Bancorp is categorized as a super-regional bank, with a market capitalization of $60 billion. Its balance sheet at the end of the second quarter included earning assets worth $619.9 billion, total loans of $379.4 billion, and total deposits of $521.6 billion.

While the stock is still recovering from a steep correction in March, the current upward trend suggests it is actionable. Some investors may prefer to wait for the stock’s 50-day moving average to cross above its 200-day line, as this often signals further price gains.

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