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

U.S. Bancorp has demonstrated robust growth, with its total average loan portfolio expanding at a 5.5% compound annual growth rate (CAGR) from 4Q19 to 2Q24, indicating strong lending demand in the marketplace. Additionally, Transaction Services fees have shown impressive growth, achieving a 7.9% CAGR from 2019 to 2023 and comprising 59% of noninterest income in 2023, suggesting a diversified revenue stream that enhances financial stability. The substantial increase in the bank's cash position, rising to $65.8 billion or 9.7% of total assets as of 2Q24, further strengthens its liquidity, positioning U.S. Bancorp favorably for future growth and potential dividend increases.

U.S. Bancorp's outlook is negatively influenced by a forecasted recession in 2024, which is expected to lead to lower earnings, increased credit losses, and slower loan growth. Key financial targets have fallen below those established in 2019, reflecting potential weaknesses in medium-term profitability, while the bank’s return on tangible common equity (ROTCE) remains lower compared to a decade ago, despite being higher than its peer group. Additionally, ongoing economic challenges from the pandemic and regulatory uncertainties contribute to anticipated revenue headwinds and further complicate positive operating leverage.