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Research Alert: CFRA Lowers Opinion On Shares Of Westamerica Bancorporation To Sell From Hold

MT Newswires ·  07/22 12:26

12:25 AM EDT, 07/22/2022 (MT Newswires) -- CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:

With shares trading at a 50% premium to peers, we see WABC underperforming given our expectations for a contraction in both loan and deposit balances. We cut our 12-month target price by $11 to $49, 13.5x our '23 EPS estimate, below WABC's 5-year forward average of 20.9x, given limited growth prospects and rising recessionary fears. We raise our '22 EPS by $0.30 to $3.60 on an improved rate environment and increase '23's by $0.11 to $3.63. WABC posts Q2 adj. EPS of $0.94 vs. $0.84 a year ago, $0.10 above consensus. Net interest income rose 10% Q/Q as the yield on average earning assets rose 23 bps to 2.77%. Loan balances (-2% Q/Q) continued their downward trek in Q2 and sit well off pre-pandemic levels. Deposit balances were relatively flat Q/Q, as the explosive growth of the past two years appears to be coming to an end with the economy beginning to tighten. Credit risk quality remained excellent with nonperforming assets falling 6% and net charge-offs holding steady at 9 bps.

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