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On Tuesday, DA Davidson adjusted the price target for Northwest Bancshares, Inc. (NASDAQ:NWBI) shares, reducing it to $13.00 from the previous $14.00, while maintaining a Neutral rating on the stock. The revision followed the company’s recent earnings report, which, despite beating core pre-provision net revenue (PPNR) expectations with stronger net interest income (NII), fees, and operating expenses, missed earnings per share (EPS) estimates due to higher-than-expected credit costs. According to InvestingPro data, the company remains profitable with a trailing twelve-month EPS of $0.79, though three analysts have recently revised their earnings expectations downward for the upcoming period.
Northwest Bancshares’ shares experienced a 3% decline compared to the KRX index since the earnings announcement, after already being down 4% year-to-date prior to the release. The lowered 2026 estimates by DA Davidson reflect anticipated slower loan growth, although this is partially offset by projected lower credit costs. Analysts expect that the fourth quarter’s credit cleanup should help to limit future losses. InvestingPro analysis indicates the stock is currently undervalued, with a notable dividend yield of 6.27% and a 31-year track record of consistent dividend payments.
The analysis highlighted notable developments in Northwest Bancshares’ commercial lending efforts, particularly a 26% growth in commercial and industrial (C&I) lending and a modest improvement in core net interest margin (NIM) by 3 basis points. However, the firm’s valuation on a price-to-earnings (P/E) and price-to-tangible book value (P/TBV) basis is deemed to be fair when compared to the supported return profiles, with a projected 2026 PPNR return on average assets (ROAA) of approximately 1.6% and a return on tangible common equity (ROTCE) of about 15%.
Given the limited potential for stock price appreciation to the revised price target, DA Davidson reiterated its Neutral stance on Northwest Bancshares shares. The firm’s analysis suggests that while there is recognition of the company’s progress in certain areas, it is balanced by the current fair market valuation of the stock.
In other recent news, Northwest Bancshares, Inc. has announced a merger with Penns Woods Bancorp, Inc. in an all-stock transaction valued at approximately $270.4 million. The merger, approved by both companies’ boards of directors, is expected to significantly enhance Northwest’s presence in North Central and Northeastern Pennsylvania. The combined company will have over $17 billion in pro forma total assets, making it one of the top 100 largest banks in the nation. Financially, Northwest anticipates the transaction to be roughly 23% accretive to its 2026 earnings per share, excluding one-time costs.
In addition to the merger, Northwest Bancshares Inc. has announced significant changes to its executive compensation agreements and bylaws. The company’s Compensation Committee has updated the employment agreements for President and CEO Louis Torchio and CFO Douglas Schosser to include provisions for annual cash bonuses and long-term equity incentive awards. The amendments introduce a clause where a notice of non-renewal from the company can constitute "Good Reason" for executive departure, subject to other conditions.
In terms of financial outlook, DA Davidson has raised the company’s earnings per share (EPS) forecast due to an optimistic net interest margin (NIM) trajectory and improved credit costs. Despite the growth in commercial lending and an improving NIM, DA Davidson maintains a neutral stance on the company’s stock. Leadership changes have also taken place at Northwest Bancshares, with the appointment of Sean Morrow as Interim Treasurer, Joseph Canfield as the new Chief Accounting Officer, and Urich Bowers as the new Chief Consumer Banking and Strategy Officer. These are among the recent developments at Northwest Bancshares.
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