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On Monday, Keefe, Bruyette & Woods maintained a positive outlook on Bankwell Financial Group, Inc. (NASDAQ:BWFG), reiterating an Outperform rating and a $40.00 price target. The research firm’s analyst, Christopher O’Connell, highlighted the company’s improving fundamentals and anticipated profitability growth following recent meetings with Bankwell’s executive team, including CEO Chris Gruseke, CFO Courtney Sacchetti, and President & Chief Banking Officer Matt McNeil.
The discussions with Bankwell’s management centered on key factors that are expected to drive the bank’s financial performance. These include expansion of the bank’s margins, enhancement of credit quality, and a strong rebound in profitability. Additionally, the team talked about Bankwell’s priorities concerning the allocation of its capital. InvestingPro analysis reveals that net income is expected to grow this year, with analysts forecasting EPS of $3.71 for FY2025.
O’Connell noted that the recent efforts to clean up credit issues have been impressive and that these initiatives, combined with opportunities for margin expansion, are likely to lead to a swift improvement in Bankwell’s profitability. The analyst expressed increased confidence in the bank’s potential for margin growth.
Bankwell Financial’s stock is currently seen as relatively undervalued by Keefe, Bruyette & Woods, trading at 85% of tangible book value (TBV) and at 8.0 times and 6.4 times its estimated earnings for 2025 and 2026, respectively. This valuation, along with the bank’s positive financial trajectory, supports the firm’s optimistic stance on the stock.
Investors are keeping an eye on Bankwell Financial as the bank continues to execute its strategy and work towards achieving the financial targets that have been set by its management. The reiterated Outperform rating and $40.00 price target suggest that Keefe, Bruyette & Woods anticipates the stock to perform well in the market.
In other recent news, Bankwell Financial Group reported an increase in its fourth-quarter earnings, with a GAAP net income of $2.5 million, or $0.32 per share, compared to $1.9 million, or $0.24 per share, in the previous quarter. The company’s board declared a $0.20 per share cash dividend, payable on February 21, 2025, to shareholders of record as of February 11, 2025. Despite the earnings increase, pre-tax, pre-provision net revenue declined 12% to $7.9 million from $9.0 million in the third quarter of 2024. Bankwell’s CEO noted the execution of purchase and sale agreements on nonperforming assets totaling $35.4 million, aiming to reduce nonperforming assets significantly. The company’s net interest margin decreased to 2.60%, down from 2.72% in the previous quarter, but an increase in net interest income is expected due to repricing time deposits. Additionally, Bankwell launched a new SBA (LON:SBA) lending division, projecting growth in noninterest income from future SBA loan sales. For the full year 2025, Bankwell anticipates $93-$95 million in net interest income and $7-$8 million in noninterest income. In other developments, Bankwell appointed Brian Merritt as the new Chief Technology Officer, bringing extensive experience in banking technology and product development.
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