U.S. Bancorp (USB) is set for steady growth, driven by recent investments, expected benefits from the Union Bank acquisition, and a focus on growing revenue from its existing customers under new Chief Executive Gunjan Kedia, RBC said in a note Wednesday.

"[U.S. Bancorp] is at an inflection point in 2025 where headwinds are becoming tailwinds as investments the company has made over the last decade begin to bear fruit, driving revenue growth that should outpace expense growth moving forward," analysts, including Gerard Cassidy, said in the note.

The company's Q1 performance exceeded expectations due to stronger-than-expected noninterest income along with a smaller-than-expected amount set aside to cover potential loan losses. These positives were partly offset by lower income from interest-based activities and slightly higher operating costs.

Kedia took over from Andy Cecere on Tuesday and reaffirmed the financial goals shared at the company's September 2024 investor day, RBC said. A key target is to achieve over 2% operating leverage, and in Q1, the company delivered 2.7%.

The analysts said they lowered their earnings estimates following the recent results and an updated outlook. They now expect the company to earn $4.40 per share in 2025 and $4.85 per share in 2026, down from previous estimates of $4.45 and $4.90, respectively.

RBC maintained its outperform rating on the stock, with a lower price target of $50 from $57 due to recent market conditions.

Price: 38.36, Change: +0.54, Percent Change: +1.43