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On Thursday, Piper Sandler initiated coverage on WesBanco (NASDAQ:WSBC), assigning the stock an Overweight rating and setting a price target of $37.00. The firm’s analyst highlighted the current trading multiples of WesBanco’s shares, noting they are below those of its peers. WesBanco’s shares trade at 9.1 times and 7.5 times Piper Sandler’s 2025 and 2026 earnings per share (EPS) estimates, respectively, compared to peer averages of 10.2 times and 8.8 times. According to InvestingPro analysis, the stock appears undervalued at its current price of $31.05, with two analysts recently revising their earnings estimates upward for the upcoming period.
The discount on WesBanco’s shares is largely attributed to the perceived integration risk following the company’s recent acquisition of Premier Financial, which was completed on February 28. The acquisition, significant in size with Premier being roughly 45% the size of WesBanco, presents potential integration challenges. However, Piper Sandler believes these risks are already factored into the stock price. InvestingPro data shows the company maintains strong financial health metrics, with particularly robust cash flow and relative value scores, suggesting resilience during this integration period. Discover more insights about WesBanco and other undervalued opportunities in the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
Piper Sandler anticipates that positive management commentary on the integration process could boost investor confidence and, subsequently, the stock price. The firm also expects WesBanco to benefit from the scale provided by the Premier deal and the forecasted cost savings, which are estimated to be 26% of Premier’s quarterly expense base of $41.4 million.
The anticipated financial performance includes a return on assets (ROA) in the 1.20%-1.40% range and a return on tangible common equity (ROTCE) in the mid to high teens. Such strong earnings power is expected to justify an in-line valuation in the near term and potentially restore the stock to its historical premium valuation over time.
WesBanco, Inc., based in Wheeling, WV, is a bank holding company with approximately $27 billion in assets. It operates more than 250 branches across several states and maintains a notable presence in the wealth management sector, with $6.0 billion in assets under management (AUM) in trust and investment services and $1.9 billion in securities brokerage. The integration of Premier Financial adds about $1.5 billion in AUM and expands WesBanco’s branch network, particularly in northern Ohio, enhancing its market share and service offerings. Notable strengths include a 49-year streak of consistent dividend payments and 14 consecutive years of dividend growth, with a current yield of 4.77%. InvestingPro subscribers can access additional insights through our detailed financial analysis and exclusive ProTips.
In other recent news, WesBanco reported impressive third-quarter 2024 earnings, exceeding analysts’ expectations with an earnings per share (EPS) of $0.71, surpassing the forecast of $0.54, and revenue of $162.89 million, beating the anticipated $156.44 million. The Federal Deposit Insurance Corporation (FDIC) has approved WesBanco’s merger with Premier Bank, expanding its operational reach across seven states. DA Davidson has reiterated a Buy rating for WesBanco, raising the stock’s price target to $45, highlighting the company’s strong loan and deposit growth and net interest margin expansion. The firm’s analysts expressed optimism about WesBanco’s growth prospects, citing a pre-provision net revenue beat and the potential for further earnings per share growth following a pending deal. The completion of the PFC deal is expected to significantly enhance WesBanco’s profitability, with earnings projected to surge by 44% in 2025 and 18% in 2026. WesBanco’s strategic initiatives have contributed to its robust performance, with loan and deposit growth outpacing its peers. These developments underscore WesBanco’s favorable financial outlook and strategic positioning in the banking sector.
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