Western Alliance shares target raised by KBW on growth potential

On Monday, Keefe, Bruyette & Woods, a financial services firm, increased its price target on shares of Western Alliance (NYSE:WAL) Bancorporation (NYSE:WAL) to $90 from the previous $74. The firm has maintained an Outperform rating for the bank's stock. The adjustment reflects the firm's expectation of the bank's potential for above-average growth and strong projected returns on tangible common equity (ROTCE).

The firm's outlook for Western Alliance Bancorporation is based on the bank's transition from a focus on building capital and liquidity to a phase where it is well-positioned to generate above-average growth. The financial institution is expected to achieve a ROTCE of 15-16% in the years 2024 and 2025, according to projections.

Western Alliance Bancorporation's potential for growth is seen as particularly robust in a lower interest rate environment. This scenario is favorable for the bank as it could lead to positive earnings per share (EPS) revisions and an expansion of its earnings multiple. The firm's analysts believe that these factors combined make Western Alliance a top pick within the industry.

The price target increase is a sign of confidence in Western Alliance's strategy and future performance. The firm's analysts underscore the bank's readiness to capitalize on the current financial landscape with responsible growth measures.

The maintained Outperform rating alongside the raised price target indicates that Western Alliance Bancorporation stands out as a strong investment opportunity, with expectations for continued success and favorable financial outcomes in the coming years.

In other recent news, Western Alliance Bancorporation has been the subject of multiple analyst reviews following a strong second-quarter performance. Truist Securities, DA Davidson, Piper Sandler, and RBC Capital have all raised their price targets for Western Alliance, maintaining positive ratings.

The upgrades reflect the bank's robust balance sheet expansion, with Truist Securities projecting a 13% and 12% rise in net interest income for the years 2024 and 2025.

In addition, Western Alliance reported earnings of $1.75 per share and significant increases in core deposits and loans held for investment, contributing to a rise in net interest income. The bank's credit quality remained relatively stable, with nonperforming loans and provisions experiencing a slight uptick.

Furthermore, Western Alliance has updated its revenue guidance for 2024, projecting higher figures due to anticipated stronger balance sheet growth. The bank expects net interest income to grow between 9-14% and non-interest income to increase by 15-25%, while non-interest expenses are projected to rise by 9-13%. These recent developments highlight the company's ongoing financial growth and stability.

InvestingPro Insights

Following the upbeat assessment by Keefe, Bruyette & Woods, InvestingPro data and tips offer additional perspectives on Western Alliance Bancorporation's (NYSE:WAL) financial health and stock performance. With a solid market capitalization of $8.27 billion and a Price/Earnings (P/E) ratio of 11.36, the bank presents as a potentially attractive investment. The P/E ratio slightly adjusts to 11.93 when looking at the last twelve months as of Q2 2024, indicating a stable valuation over time.

An important aspect for investors to consider is the bank's dividend track record. One of the InvestingPro Tips highlights that Western Alliance has raised its dividend for 5 consecutive years, signaling a commitment to returning value to shareholders.

Moreover, the company's strong performance is evident with a significant return over the last week, month, three months, and the last year, with price total returns of 9.85%, 30.03%, 31.53%, and 62.99% respectively.

While some analysts have revised their earnings estimates downwards for the upcoming period, it's noteworthy that the bank's revenue growth remains positive with a 12.41% increase over the last twelve months as of Q2 2024.

Investors looking to delve deeper into Western Alliance Bancorporation's potential can explore additional InvestingPro Tips, where they will find further analysis and insights. For those interested in a more comprehensive investment tool, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, which includes a total of 11 additional InvestingPro Tips for Western Alliance.

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