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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 climbed 6.46% following the Q2 earnings report, with the successful capital ratio raise as the catalyst.
  • Raymond James, Goldman Sachs, and Wedbush upgraded their ratings or raised price targets for U.S. Bancorp.
  • U.S. Bancorp is a super-regional bank with diversified revenue streams.
  • While Wall Street expects an earnings decline in 2023, investors are focused on capital build.
  • There are five other stocks that analysts prefer over U.S. Bancorp.

Analysts have been optimistic about the potential of U.S. Bancorp (NYSE: USB), stating that the company’s shares have been undervalued as investors focused on capital requirements.

Shares of U.S. Bancorp rose 6.46% after the bank’s second-quarter earnings report. Although the results were in line with expectations, investors were pleased with the successful increase in the common-equity tier 1 (CET1) capital ratio. This ratio measures a bank’s essential capital compared to its risk-weighted assets, indicating its ability to absorb potential losses.

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 rating for the stock is “moderate buy,” with a price target of $48.47, offering a significant upside of 23.85%.

U.S. Bancorp’s stock has seen strong performance in the past month and three months, gaining 17.76% and 9.39% respectively.

In the second quarter, the company reported earnings per share of $1.12, a year-over-year increase of 3%. Revenue for the quarter was $7.141 billion, up 19%.

Bank of America upgraded U.S. Bancorp’s stock to “buy” earlier this month, emphasizing the bank’s scale, earnings potential, and strong execution.

Analysts are pleased with the company’s guidance and its increased specificity in regards to the capital build process.

U.S. Bancorp, with a market capitalization of $60 billion, is categorized as a super-regional bank. As of the end of the second quarter, the company’s earning assets, total loans, and total deposits were $619.9 billion, $379.4 billion, and $521.6 billion respectively.

While U.S. Bancorp’s stock is still recovering from a steep correction earlier this year, the current upward trend line suggests that it could continue to rise. Some investors may prefer to wait for the stock’s 50-day moving average to cross above its 200-day line, which often signals further price gains.

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