DA Davidson upgrades U.S. Bancorp with ‘inflection’ in early stages

DA Davidson analyst Peter Winter upgraded U.S. Bancorp (USB) to Buy from Neutral with a price target of $60, up from $58. After several years of “meaningful stock underperformance and losing its premium valuation,” U.S. Bancorp is in the “early stages of an inflection” and set to regain positive operating leverage above 0.5%, after missing it seven out of the last eight years, led by an expected rebound in revenue growth and controlling expenses, the analyst tells investors in a research note. The firm says the bank’s capital expenditures “have shifted from defensive to offense,” while its expense growth should moderate from prior years as the investments are in the run-rate. DA Davidson adds U.S. Bancorp is past its risk-weighted assets “diet” and has strengthened its capital ratios.