U.S. Bank could be a beneficiary as the bank crisis pushes depositors to move holdings to larger regional banks, according to Baird. Baird analyst David George upgraded the stock to outperform from neutral. George’s price target of $52 implies the stock could rally 57.8% from where it closed Friday. Banks have been battered over the past week as the closures of Silicon Valley Bank and Signature Bank in the U.S.. along with and acquisition of Credit Suisse by UBS in Europe, have fanned the fears of a growing crisis in the financial sector. The SPDR S & P Regional Banking ETF (KRE) ending last week down 14.3%, while US Bank lost 18.9% over the course of last week. That drop makes “this is a rare opportunity to take a position in this high-quality regional bank with little to no downside and ~50% upside over time,” George said in a Monday note to clients. He called the stock a “high quality franchise finally on sale.” George said US Bank and other “super regionals,” a term for larger regional banks, will likely gain deposits as customers look away from smaller banks amid concerns of future bank runs. The company’s acquisition of Union Bank should also be helpful, he said. The analyst also pointed to an attractive valuation for the stock, which trades at a price-to-earnings multiple well below the S & P 500’s. The company’s pre-provision net revenue also points to a 40%-50% discount to historical valuations, he said. Pre-provision net revenue refers to the combination of net intertest income and non-interest income minus expenses, before an adjustment for loss provisions . While George said the market is currently more focused on a bank’s “narrative” than its valuation, the fallout within the industry should not be taken by bank investors as a harbinger for the broader industry. “We’ve always believed that forward returns are a function of the price one pays, and the valuations today are the lowest they’ve been since the financial crisis,” George said. “That was indeed a crisis. Today’s period is not.” “The stocks are more inexpensive today than they were during the pandemic,” he said, “and if you don’t buy banks here, we aren’t sure when you do.” USB KRE 5D mountain US Bank and KRE ETF — CNBC’s Michael Bloom contributed to this report.
