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On Tuesday, DA Davidson analyst Jeff Rulis adjusted the price target for Washington Federal (NASDAQ:WAFD) shares, bringing it down to $29.00 from the previous $31.00, while keeping a Neutral rating on the stock. The revision follows Washington Federal’s recent performance, which showed stability with an increase in Net Interest Margin (NIM), a decrease in expenses, and a surge in fee income. According to InvestingPro data, the stock has shown significant momentum with a 7.87% return over the past week, despite trading at just 0.79 times book value.
Rulis noted that Washington Federal is planning to increase share buybacks in the short term, taking advantage of the stock’s valuation being below tangible book value (TBV). The analyst anticipates that the bank’s NIM will continue to improve and that growth will resume. In light of these expectations, DA Davidson has raised its earnings per share (EPS) estimates for fiscal years 2025 and 2026 from $2.50 and $3.00 to $2.65 and $3.05, respectively. InvestingPro analysis suggests the stock is currently undervalued, with additional metrics and insights available to subscribers.
The updated model by DA Davidson includes expectations of a better NIM and fee income outlook, along with increased activity in share buybacks. However, these positive adjustments are somewhat balanced by a lowered assumption for loan growth. Rulis explained that despite the enhanced EPS forecast, the target price has been reduced due to a compression in the trading multiples of peers.
The new price target of $29.00 is based on 9.7 times DA Davidson’s 2026 EPS estimate and equates to 1.0 times the current TBV. The analyst’s commentary suggests a cautious optimism for Washington Federal’s financial performance in the upcoming years, tempered by market conditions affecting the bank’s valuation.
In other recent news, WaFd Inc. announced it will release its quarterly earnings results for the period ending March 31, 2025, after market close on April 17, 2025. This upcoming earnings report is expected to provide insights into the company’s financial performance for the first quarter of the fiscal year. In a separate development, WaFd Inc. has approved its 2025 Stock Incentive Plan, allowing for the issuance of 3,250,000 shares of common stock, which aims to align employee and shareholder interests. Additionally, the company declared a cash dividend for its Series A Preferred Stock, set at $12.1875 per share, to be paid on April 15, 2025.
In another corporate action, WaFd Inc. raised its regular quarterly cash dividend to 27 cents per share, continuing its long-standing tradition of dividend payments. Meanwhile, DA Davidson downgraded Washington Federal’s stock from Buy to Neutral, citing an earnings miss and a strategic pivot, including the bank’s exit from the single-family residential mortgage business. The analyst expressed concerns about potential distractions and headwinds that could impact the bank’s short-term performance. These recent developments reflect WaFd Inc.’s ongoing efforts to manage its financial strategies and shareholder relations.
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