Stephens has maintained an Overweight rating on Webster Financial (NYSE: NYSE:WBS) with a steady price target of $58.00. The company reported third-quarter 2024 results, with GAAP earnings at $1.11 per share and operating earnings at $1.35 per share, slightly ahead of the consensus by a penny but under Stephens' estimate of $1.38.
The beat against the consensus was attributed to a higher net interest income (NII) of $590 million, with a net interest margin (NIM) improvement of 4 basis points quarter-over-quarter to 3.36%, surpassing expectations in core fee income and lower expenses.
The shortfall relative to Stephens' forecast was mainly due to a higher-than-anticipated provision. Despite this week's news concerning Webster Financial's involvement with two large office loans, the firm saw only a modest increase in nonperforming assets to assets ratio, up 5 basis points to 0.54%. Net charge-offs to average loans were 0.35%, aligning with Stephens' projections.
Webster Financial also experienced robust deposit growth in the third quarter, with an overall increase of 3.6%. This included a 7.5% quarter-over-quarter rise in demand deposits and a 5.6% increase in Health Savings Account (HSA) deposits. According to Stephens, the guidance provided by Webster Financial suggests that the consensus forecast for fourth-quarter 2024 net interest income might be slightly underestimated.
In other recent news, Webster Financial Corporation has reported robust second-quarter results for 2024, with adjusted earnings per share standing at $1.26, and an increase in core deposits and loans. The company anticipates a loan growth of 4-5% and deposit growth around 5% for the full year.
However, Piper Sandler maintains an Overweight rating on Webster Financial shares with a steady price target of $54.00, despite the company's performance not aligning with expectations. On the other hand, Morgan Stanley downgraded Webster Financial stock to Equalweight from Overweight, citing concerns over the bank's net interest income prospects and credit quality.
Yet, the firm raised the price target to $57.00, hinting at some positive expectations. Lastly, RBC Capital reduced its price target to $51 from $54, following the company's second-quarter results and a revised outlook for 2024 that anticipates slower growth in both balance sheet and revenue.
InvestingPro Insights
Webster Financial's recent performance aligns with several key metrics and insights from InvestingPro. The company's P/E ratio of 10.58 suggests a relatively attractive valuation, especially considering its profitable status over the last twelve months. This profitability is further supported by an InvestingPro Tip indicating that analysts predict the company will remain profitable this year.
The bank's dividend yield of 3.29% is noteworthy, particularly in light of another InvestingPro Tip revealing that Webster Financial has maintained dividend payments for 38 consecutive years. This long-standing commitment to shareholder returns underscores the company's financial stability, which is crucial in the banking sector.
While the recent earnings report showed some positive trends, investors should be aware that 7 analysts have revised their earnings downwards for the upcoming period, according to InvestingPro Tips. This could be a factor to watch in future quarters.
For those seeking a more comprehensive analysis, InvestingPro offers 6 additional tips for Webster Financial, providing a deeper understanding of the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.