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Friday - Seaport Global Securities analysts have upgraded Washington Trust Bancorp (NASDAQ:WASH) stock from Neutral to Buy, setting a price target of $36.00. The upgrade follows a recent decline in the company’s share price, prompting analysts to reassess the stock’s potential. According to InvestingPro data, the stock is currently trading near its Fair Value, with analyst targets ranging from $35 to $36, suggesting potential upside. Two analysts have recently revised their earnings estimates upward for the upcoming period. Washington Trust’s successful capital raise and balance sheet restructuring have been highlighted as key factors that secure dividend coverage, with new dividend payout ratios of 82% for fiscal year 2025 estimates and 74% for fiscal year 2026 estimates. InvestingPro data reveals the bank has maintained dividend payments for an impressive 42 consecutive years, with a current dividend yield of 7.61%. Get access to more exclusive dividend insights and 6 additional ProTips with an InvestingPro subscription.
The firm reiterated its earnings estimates for Washington Trust at $2.75 for fiscal year 2025 and $3.02 for fiscal year 2026. The current share price of $29.44 reflects a trading value at 131% of price to tangible book (P/TB) and 9.7 times the firm’s fiscal year 2026 earnings estimate. Additionally, with a dividend yield of approximately 7.6%, shares are trading 13.4% below the price of the recent spot capital raise of $34.00 per share.
Seaport Global Securities highlighted Washington Trust’s notable history of conservative underwriting, particularly during the Global Financial Crisis (GFC) from 2008 to 2012, when the bank’s net charge-offs (NCOs) remained significantly lower than the industry average for FDIC-insured banks. In fiscal year 2008, Washington Trust’s NCOs were 0.08%, increasing to 0.25% in fiscal year 2009, 0.24% in fiscal year 2010, 0.17% in fiscal year 2011, and 0.07% in fiscal year 2012. For fiscal year 2024, the bank’s NCOs totaled just 0.04%.
The analysts view Washington Trust as a standout "best of breed" bank and consider it to be a strong core holding, especially through credit cycles. They also note that the bank stands to benefit significantly from falling rates, as all of its securities are listed as available-for-sale (AFS), without any held-to-maturity (HTM) securities. The accumulated other comprehensive income (AOCI) drag on tangible book value amounted to a negative ($6.18) per share. InvestingPro’s comprehensive analysis indicates the bank maintains a beta of 0.82, suggesting lower volatility than the market average. Discover detailed financial health metrics and a complete Pro Research Report, available for over 1,400 US stocks on InvestingPro.
In other recent news, Washington Trust Bancorp reported mixed financial results for the fourth quarter of 2024. The company achieved an adjusted earnings per share (EPS) of $0.59, slightly exceeding analysts’ expectations of $0.57. Despite this positive outcome, Washington Trust faced a significant net loss of $60.8 million, equivalent to $3.46 per share. This loss was attributed to strategic balance sheet repositioning efforts, which included selling lower-yielding assets. Additionally, the bank reported a 2% increase in net interest income, reaching $32.9 million, although total loans decreased by 7%. On a strategic note, Washington Trust highlighted its focus on deposit growth and operational efficiencies. Analysts from Seaport Research Partners and KBW provided insights during the earnings call, discussing the company’s financial strategies and future projections. Washington Trust also announced new strategic hires, including a new Head of Retail Banking, to bolster its deposit growth initiatives.
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