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Investing.com - Deutsche Bank upgraded U.S. Bancorp (NYSE:USB), a $73.65 billion market cap bank currently trading at a P/E ratio of 10.84, from Hold to Buy on Thursday, setting a price target of $52.50.
The upgrade follows two consecutive quarters of in-line or better-than-expected results for the bank, which Deutsche Bank notes is a positive shift after several quarters of disappointments. The firm highlighted this improvement as a step toward restoring credibility with investors. According to InvestingPro, 13 analysts have recently revised their earnings estimates upward for the upcoming period, supporting this positive outlook.
Deutsche Bank cited U.S. Bancorp’s net interest margin (NIM) outlook as a key factor in the upgrade, noting the bank benefits more from rate cuts than peers and should see solid gains from fixed rate asset repricing. These factors are expected to drive NIM above 3% in 2027 compared to 2.75% in the third quarter of 2025. The bank has demonstrated strong financial stability, maintaining dividend payments for 55 consecutive years and achieving revenue growth of 4.48% in the last twelve months.
The research firm acknowledged that while U.S. Bancorp’s projected 8% EPS growth in 2026 falls below peer expectations, there could be upside potential from the improving NIM outlook. The bank’s shares currently trade at 9.8x FY26 consensus estimates, in line with large regional banks.
U.S. Bancorp shares have risen 3% since the start of earnings season but remain flat year-to-date, matching peer performance after underperforming by 12% last year.
In other recent news, U.S. Bancorp reported its third-quarter earnings for 2025, surpassing analysts’ expectations. The company achieved an earnings per share (EPS) of $1.22, outperforming the forecasted $1.12, and recorded revenue of $7.3 billion, which exceeded the anticipated $7.16 billion. Analysts from TD Cowen and DA Davidson have raised their price targets for U.S. Bancorp, with TD Cowen adjusting its target to $60.00 and DA Davidson to $59.00. Both firms maintained a Buy rating on the stock. TD Cowen highlighted the bank’s accelerating revenues and controlled expenses, while DA Davidson emphasized the strong year-over-year positive operating leverage of 530 basis points in the third quarter of 2025. This marks the fourth consecutive quarter where U.S. Bancorp achieved operating leverage of 190 basis points or greater. These developments reflect a positive sentiment among analysts regarding the bank’s operational performance and financial health.
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