JPMorgan Upgrades U.S. Bancorp, Raises Big Bank Price Targets Ahead Of Q1 Earnings
Big bank earnings season is just around the corner, and U.S. Bancorp (NYSE: USB) landed a big Wall Street upgrade on Thursday ahead of its upcoming report. The Analyst: J.P. Morgan analyst Vivek Juneja upgraded U.S. Bancorp from Neutral to Overweight and raised his price target from $53 to $60. Juneja also raised price targets of the other seven large cap banks stocks under his coverage: Bank of America Corp (NYSE: BAC), Citigroup Inc (NYSE: C), Citizens Financial Group Inc (NYSE: CFG) Fifth Third Bancorp (NYSE: FITB), Regions Financial Corp (NYSE: RF), Truist Financial Corp (NYSE: TFC) and Wells Fargo & Co. (NYSE: WFC). Related Link: BofA Upgrades CME Group, Bank Of NY Mellon On Expectations For Rising Interest Rates The Thesis: In the upgrade note, Juneja said investors should expect extremely strong first-quarter numbers from big banks for two reasons. First, an improving macroeconomic environment likely means banks are releasing their credit reserves. Second, an uptick in spending means higher card-related fees. That potentially sharp uptick in spending is particularly good news for U.S. Bancorp, which Juneja said has the most exposure to sending given card-related fees accounted for about 16% of the company’s total revenue in 2019. View more earnings on USB “Chase card spend data shows that volumes are 12% above 2019 levels recently, inflecting from running below 2019 levels at [the] end of February,” he said. Airlines and hospitality spending accounted for 37% of merchant acquiring volumes and 7% of retail volumes in 2019, Juneja said. Credit card volumes will be particularly important for banks given they have higher fees than debit cards. Juneja said U.S. Bancorp trades at an attractive valuation at just 13.5 times estimated 2022 earnings. He is also bullish on several other big bank stocks heading into the first-quarter earnings season. J.P. Morgan also has Overweight ratings for Bank of America Corp, Citizens Financial Group Inc and Regions Financial Corp. Benzinga’s Take: Bank earnings season kicks off on Wed., April 14 with reports from JPMorgan Chase & Co. (NYSE: JPM), Goldman Sachs Group Inc (NYSE: GS) and Wells Fargo & Co. Banks will likely put up some impressive first-quarter numbers, but it remains to be seen just how much earnings upside is already priced into their stock prices after big rallies in bank stocks year-to-date. (Photo: U.S. Bank) Latest Ratings for USB DateFirmActionFromTo Apr 2021JP MorganUpgradesNeutralOverweight Apr 2021Deutsche BankMaintainsBuy Mar 2021BairdDowngradesOutperformNeutral View More Analyst Ratings for USB View the Latest Analyst Ratings See more from BenzingaClick here for options trades from BenzingaIf You Invested ,000 In Netflix Stock One Year Ago, Here’s How Much You’d Have Now5 Things That Could Derail The Stock Market In 2021© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.