U.S. Bancorp (USB) Shares Drop 0.75% to 2025 Low on Weak Earnings Outlook, Sector Headwinds

U.S. Bancorp (USB) shares fell 0.75% on Thursday, hitting their lowest level since September 2025, with an intraday decline of 1.65%. The drop reflects a confluence of weak earnings guidance, mixed institutional activity, and broader sector headwinds.

Analysts highlighted concerns over constrained loan growth, which is expected to weigh on third-quarter net interest income—a critical revenue driver for banks. Following a downbeat Q3 forecast at a Barclays conference, Citigroup and Piper Sandler cut price targets to $37.00 and $40.00, respectively, reinforcing cautious sentiment. Despite a "Moderate Buy" consensus, the average "Hold" recommendation from major firms underscores uncertainty about the bank’s near-term performance.

Institutional investors displayed divergent strategies. Entities like Cordatus Wealth Management and Price T Rowe Associates added to their stakes, while others, including Lynch & Associates, trimmed holdings. The 77.6% institutional ownership ratio remains a stabilizing factor, though recent sales signal short-term skepticism. Short interest, meanwhile, fell 5.34% month-over-month, suggesting improving confidence.

USB’s strategic initiatives aim to offset sector challenges. New embedded payroll solutions for healthcare providers and a resumed institutional bitcoin custody service highlight efforts to tap into high-growth markets. Leadership changes, including appointments in wealth and corporate banking, reflect a pivot toward product innovation. However, insider selling of $1.1 million in shares over three months has raised questions about internal optimism.

While USB’s 4.10% dividend yield and 14-year consecutive growth streak remain attractive, analysts caution that macroeconomic risks—particularly high interest rates and slow loan growth—could persist. The bank’s undervalued metrics (P/E of 11.57, P/B of 1.45) contrast with a PEG ratio of 1.53, suggesting potential overvaluation relative to earnings expectations. Sector-wide challenges, including regulatory pressures and competition from fintechs, further complicate the outlook.

USB’s recent moves into healthcare and crypto custody position it to capture niche opportunities, but execution will be key. The stock’s trajectory will likely hinge on macroeconomic stability and the bank’s ability to navigate sector-specific risks while leveraging its strategic initiatives.