) -- A noted bank analyst lifted his rating on
to buy on Thursday, saying the bank has a bold plan to boost performance in the quarters ahead, with a leader who is charged up to put it into action.
Rochdale Research analyst Richard Bove also lifted his price target on US Bancorp to $28 from $25. The company's shares closed Wednesday at $22.82.
Bove says US Bancorp CEO Richard Davis sees opportunities in the market as weakened competitors pull back or struggle to stay afloat. Davis has created specialized programs for each market in which the bank operates, and is working hard to cross-sell products to existing consumers.
Davis is also touting US Bancorp's capital position and strong debt ratings and is willing to consider acquisitions to execute his robust expansion strategy.
"His goal is to be a powerhouse in regional banking; a national bank in the corporate lending and trust sectors; and an international payment services company," Bove says, adding that, "The concept is bold. The approach appears to be well-thought out."
However, the analyst also noted some obvious risks. While US Bancorp has offices in 24 states, its core Midwest markets are not particularly strong, and finding profitable opportunities is difficult. Margins are further constrained by a low-interest rate environment, as
CEO John Stumpf noted earlier this week.
Furthermore, like all lenders in this economic environment, including bigger competitors like
Bank of America
, US Bancorp faces more loans going bad.
Still, Davis has been pursuing expansion since he took the reins in late-2006, and been relatively successful so far. While his strategy has been hampered by the financial crisis, US Bancorp may now benefit from weak competition. Bove also notes that peers are meeting with worse experience.
-- Written by Lauren Tara LaCapra in New York