U.S. Bancorp (NYSE: USB) could be a notable beneficiary of the recent bank failures, says David George. He’s a Senior Analyst at Baird.
U.S. Bancorp stock could climb to $52
In a research note, George recommended that investors buy this regional bank stock today as it has upside to $52 – up more than 50% from here.
It’s a high-quality franchise finally on sale. This is a rare opportunity to take a position in this high-quality regional bank with little to no downside and about 50% upside over time.
Versus its year-to-date high, U.S. Bancorp stock is currently down more than 30% even though it recently reported better-than-expected earnings for its fiscal fourth quarter and issued upbeat guidance for the future.
Recent bank failures will benefit USB
George expects a sharp increase in deposits at the larger regional banks in the coming months as customers scramble to protect themselves against future bank runs. The recent acquisition of Union Bank will be a catalyst for the U.S. Bancorp as well, he added.
USB is currently trading at a multiple that significantly lags the benchmark index. The analyst also cited the bank’s pre-provision net revenue that signals up to a 50% discount versus historical valuations.
Valuations today are lowest they’ve been since the financial crisis that was indeed a crisis; today’s period is not. Stocks are more inexpensive today than during pandemic and if you don’t buy banks here, we’re not sure when you do.
U.S. Bancorp stock currently pays a dividend yield of 5.51% that makes up for another great reason to own it.
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