U.S. Bancorp (USB) Stock Forecast & Price Target

U.S. Bancorp's financial position indicates a positive outlook, demonstrated by a 5.3% increase in fee income to $3.085 billion and a robust 1.8% quarter-over-quarter growth in average deposits, reflecting strong demand for interest-bearing accounts. Additionally, the bank achieved a net interest margin expansion of 9 basis points to 2.75%, supported by strategic asset optimization and improved balance sheet management, which resulted in higher net interest income forecasts. The long-term benefits of the Union Bank acquisition are expected to further enhance revenue growth through improved capabilities and access to new markets, contributing to a strengthened financial outlook for the company.

U.S. Bancorp is currently experiencing a significant decline in its relative valuation, with its price-to-earnings (P/E) and price-to-tangible book value (P/TBV) ratios reaching a ten-year low, indicative of prolonged underperformance. Economic forecasts suggest a looming recession, which is projected to adversely affect earnings per share (EPS) estimates for 2025 and 2026 due to anticipated increases in credit losses and weaker loan growth, further pressing down the bank's valuation. Additionally, ongoing issues with net interest margin (NIM) estimates and a lengthy approval process for acquisitions have contributed to investor dissatisfaction and concerns about the bank's growth trajectory, compounding the negative outlook.