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U.S. Bancorp (USB) stock is trading higher on Friday after D.A. Davidson kept its bullish stance on the bank, pointing to strong revenue growth, improving profitability, and solid credit quality.
In a Thursday research note, analyst Peter Winter reiterated a Buy rating and a $73 price forecast. He thinks sustained revenue growth and industry-leading profitability could help U.S. Bancorp earn a higher valuation.
U.S. Bancorp reported third-quarter earnings of $1.34 per share, beating both D.A. Davidson's estimate and the consensus forecast of $1.33.
Revenue rose 10.9% year over year, excluding securities losses. The bank also delivered 240 basis points of positive operating leverage, as revenue grew faster than expenses.
Net interest income climbed 2.5% sequentially to $4.49 billion. Meanwhile, net interest margin improved by five basis points to 2.84%, exceeding Winter's 2.81% forecast.
The analyst highlighted improving loan yields and higher returns from assets being repriced as key drivers of profitability.
Winter also sees opportunities from U.S. Bancorp's partnership with Amazon.com Inc. (AMZN).
The bank acquired Amazon's roughly $1.7 billion small-business credit card portfolio in August, gaining approximately 70,000 co-branded customers.
D.A. Davidson expects the portfolio to generate $75 million to $85 million in quarterly revenue, with roughly two-thirds coming from net interest income.
Additionally, U.S. Bancorp expects its net interest margin to reach 3% sometime in 2027, supported by higher-yielding assets and the Amazon partnership.
Following the third-quarter results, Winter raised his 2026 earnings forecast to $5.31 per share from $5.27. He also increased his 2027 estimate to $5.86 from $5.82.
The analyst expects the bank's strong profitability and revenue momentum to support its valuation.
U.S. Bancorp also plans to resume share repurchases within the next one or two quarters as capital levels improve.
However, rising expenses remain a consideration as the bank continues investing in technology and future growth.
Despite those costs, Winter remains bullish, citing healthy credit trends, improving margins and sustained revenue growth as reasons for maintaining his $73 price forecast.
The stock carries a Buy rating with an average price forecast of $69.65. Recent analyst actions include:
USB Price Action: U.S. Bancorp shares were up 1.71% at $58.37 at the time of publication on Friday, according to market data.
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