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

U.S. Bancorp's recent financial performance highlights a positive outlook, evidenced by a solid increase in fee income of 5.3%, reaching $3.085 billion, driven by net interest margin expansion and strategic balance sheet optimizations. Average deposits grew by 1.8% quarter-over-quarter to $511.78 billion, supported by significant growth in interest-bearing deposits, while asset quality and capital ratios remained robust, reflected in the CET1 ratio rising to 10.9%. Furthermore, the successful integration of the Union Bank acquisition continues to enhance revenue streams, particularly in California, with impact finance revenues growing at a 17% compound annual growth rate from 2021 to 2024, positioning U.S. Bancorp for sustained growth in coming years.

U.S. Bancorp's stock outlook is negatively impacted by its persistent underperformance, as evidenced by its trading at the lowest relative valuation on both P/E and P/TBV metrics over the past decade. The anticipated recession is expected to exacerbate pressures on earnings per share (EPS) for 2025 and 2026, driven by higher credit losses and weaker loan growth, which may lead to further valuation declines. Additionally, the company's challenges in achieving a net interest margin (NIM) above 3.00%, coupled with lower estimates following disappointing net interest income (NII) prints, reflect broader investor concerns about subpar growth and the prolonged approval process for the MUFG Union deal.