U.S. Bancorp (USB) witnessed a 3.3% surge following an upgrade by B of A analyst Ebrahim H. Poonawala. Poonawala, now rating the bank as a buy from neutral, also raised the price target to $40 a share. This move was a result of Poonawala’s recognition of the company’s high-quality franchise and its under-appreciated defensibility demonstrated in its balance sheet.
According to Poonawala, the heightened focus on capital build has overshadowed the fact that U.S. Bancorp is one of the top-notch franchises in the U.S. banking industry. Furthermore, Poonawala predicts that U.S. Bancorp will outperform its competitors during the next credit cycle.
One of the key factors contributing to U.S. Bancorp’s resilience lies in its below-average exposure to vulnerable sectors, such as commercial real estate. Currently, only 2% of its loans are associated with office spaces. This further adds to its overall stability and prospects for growth.
As a testament to Poonawala’s confidence in the bank’s future, he has adjusted his earnings estimates for U.S. Bancorp. His 2023 earning estimate has been revised from $4.65 to $4.35 per share while the 2024 profit estimate now stands at $4.10 per share, down from $4.65 per share.
With its solid fundamentals and promising outlook, U.S. Bancorp is set to seize new opportunities and excel in the competitive banking industry.
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