Bullish indicating open at $55-$60, IPO prices at $37
On Tuesday, Citi analyst Benjamin Gerlinger increased the price target on Webster Financial Corporation (NYSE:WBS) to $65 from $57, reaffirming a Buy rating on the company’s stock. Currently trading at $53.81, the stock sits below both Citi’s target and the broader analyst range of $50-$72. According to InvestingPro data, Webster Financial appears fairly valued at current levels. The adjustment comes amid legislative discussions that could significantly affect the bank’s Health Savings Accounts (HSAs) offering. With a market capitalization of $9 billion and a healthy P/E ratio of 11.9x, Webster Financial has demonstrated strong financial performance, maintaining dividend payments for 39 consecutive years.
Gerlinger’s analysis focuses on the potential effects of the One Big Beautiful Bill, currently under Senate debate, based on provisions in the House of Representatives’ draft. He believes that the proposed expansion of HSA funding and coverage represents the most substantial change to the program since its inception in 2004.
The analyst anticipates that while some client education may be necessary to fully understand the changes, the overall impact on Webster Financial’s future earnings could be significant. This potential stems from the benefits of low-cost deposits and increased interchange activity associated with HSAs.
Citi’s revised earnings per share (EPS) forecast for Webster Financial in 2026 includes an additional $0.56 or a 8.3% increase, over the consensus expectations of $6.50. Gerlinger suggests that the legislative enhancements to HSAs could be a key driver of this improved financial performance for the company. For deeper insights into Webster Financial’s valuation and growth prospects, investors can access the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Webster Financial Corporation reported its first-quarter 2025 earnings, which showed a slight miss on both earnings per share (EPS) and revenue forecasts. The company posted an EPS of $1.30, below the anticipated $1.38, and revenue of $704.8 million, falling short of the projected $707.12 million. In addition to these financial results, Webster Financial expanded its stock buyback program by $700 million, indicating a strategic move to enhance shareholder value. Meanwhile, Jefferies initiated coverage on Webster Financial with a Buy rating and set a price target of $65, citing the company’s above-average profitability and diversified deposit base as key factors.
Shareholders of Webster Financial also approved executive compensation and elected the board of directors during the company’s recent Annual Meeting. Furthermore, the ratification of KPMG LLP as the independent registered public accounting firm was confirmed. Despite the earnings miss, Webster Financial maintained solid asset growth, with total assets reaching $80 billion and deposits increasing by over $800 million. The company’s strategic initiatives and product developments continue to advance, with plans for a new Health Savings Account product suite and a joint venture with Marathon in the pipeline.
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