US Bancorp Analyst Says It's 'Highest Quality Franchise' In The Sector

Shares of US Bancorp USB continued to climb Tuesday morning, even as investors grew concerned after the Federal Reserve’s latest stress test report for the banking sector.

Investors may be “missing the forest (for the trees)” by focusing on capital build, rather than a company that is “among the highest quality franchises in the US banking industry,” according to BofA Securities.

The US Bancorp Analyst: Ebrahim Poonawala upgraded US Bancorp from Neutral to Buy while raising the price target from $38 to $40.

The US Bancorp Takeaways: U.S. Bancorp could generate superior earnings growth, driven by its scale, balance sheet defensibility and strong execution, Poonawala said in a Tuesday upgrade note.

Check out other analyst stock ratings.

“While investors are understandably anxious with regards to the required capital build, mgmt. appears well prepared to manage for this via a gradual recovery of unrealized losses (bond book), retained earnings and RWA optimization,” the analyst said. 

“The payments business offers upside optionality to stock valuation, especially if USB can establish itself as a market share winner,” he said, while adding that U.S. Bancorp could be “an outperformer during the next credit cycle.”

USB Price Action: Shares of U.S. Bancorp were trading 3.17% higher at $34.80 Tuesday morning. 

Photo via Shutterstock.