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On Tuesday, East West Bancorp (NASDAQ:EWBC) shares received a positive outlook from Jefferies, as the firm initiated coverage with a Buy rating and set a price target of $115. The coverage initiation highlights East West Bancorp’s robust capital levels and the potential for continued growth. According to InvestingPro data, 10 analysts have recently revised their earnings estimates upward for the upcoming period, with the stock currently trading at $94.37 and showing a P/E ratio of 11.14.
The newly established Buy rating by Jefferies is influenced by East West’s impressive capital ratios, with a Common Equity Tier 1 (CET-1) ratio of 14.3% reported in the first quarter of 2025. Jefferies projects a 12% annual growth in tangible book value over the next three years, underpinning the optimistic stance. The bank’s strong financial position is reflected in its "GOOD" overall health score from InvestingPro, which evaluates multiple financial metrics including profitability and growth potential.
East West Bancorp’s consistent history of above-average loan and deposit growth was noted as a key factor in the favorable assessment. The bank’s unique position in the market with its cross-border banking services was also seen as a differentiator that could drive future success. The bank has demonstrated its commitment to shareholder returns by maintaining dividend payments for 27 consecutive years, with a current dividend yield of 2.52%.
The efficiency ratio of East West Bancorp stands out among its peers, contributing to Jefferies’ positive rating. This measure, which indicates the bank’s cost management effectiveness, is seen as a sign of operational excellence.
The price target of $115 set by Jefferies reflects the firm’s confidence in East West Bancorp’s ability to sustain growth and profitability. This target suggests a potential upside from the bank’s current market valuation, based on the closing price prior to the announcement.
In other recent news, East West Bancorp has reported a strong first quarter for 2025, exceeding Wall Street expectations. The company posted an earnings per share (EPS) of $2.08, surpassing the analyst forecast of $2.05. Revenue for the quarter reached a record $693 million, outpacing the expected $672.61 million. This performance was bolstered by a notable increase in net interest income, which rose to $600 million, and an 8% growth in fee income. The bank also experienced a 1% quarter-over-quarter loan growth, reaching $54 billion, and achieved a return on tangible common equity of nearly 16%.
Financial analysts have responded positively to these results, with Janney analyst Timothy Coffey noting the bank’s resilience against economic uncertainties. Despite concerns about tariffs and international trade, Coffey believes these factors are unlikely to significantly impact East West Bancorp due to its domestic focus. The bank’s strong capital ratios and diversified balance sheet are seen as key strengths in navigating potential challenges. Furthermore, East West Bancorp has expressed confidence in its ability to support customers and capitalize on opportunities, underscoring its strategic focus on deposit cost optimization and expanding fee income.
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