On Friday, Raymond (NS:RYMD) James analysts adjusted the price target for Webster Financial (NYSE: NYSE:WBS), increasing it to $65.00 from the previous $61.00. Alongside this change, the analysts reiterated an Outperform rating for the company’s stock.
The adjustment follows Webster Financial’s fourth-quarter results, which showcased an earnings per share (EPS) beat attributed to robust net interest income and fee growth. Loan growth was reported at 1.1%, aligning with market expectations. However, deposit growth showed a slight decline, and credit costs, along with expenses, were higher than anticipated.
The analysts provided insights into the rationale behind the revised price target and outlook, noting a raised EPS forecast. This revision is based on expectations of stronger fee income and a wider near-term net interest margin (NIM).
While the long-term credit outlook remains stable, there is an anticipation of potentially higher near-term losses. Expenses are also projected to increase, linked to costs associated with the company’s growth past the $100 billion mark, although the rise in expenses is not as significant as previously feared.
The report further discusses Webster Financial’s capital management strategies. According to Raymond James, capital deployment is likely to continue as the company’s common equity tier 1 (CET1) ratio exceeds its targets. This strategy is seen as a positive move, signaling potential for future growth.
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