Webster Financial: Hold Rating Maintained Amid Revised Guidance and Mixed Financial Metrics

Wedbush analyst David Chiaverini has maintained their neutral stance on WBS stock, giving a Hold rating on April 9.

David Chiaverini has given his Hold rating due to a combination of factors related to Webster Financial’s recent performance and future projections. The company reported a quarter that was in line with expectations, but the guidance for net interest income (NII) and loan growth was revised downward for the fiscal year 2024. The stability in deposit balances was somewhat offset by a negative shift in the mix, and although core deposits saw an increase, this was coupled with a contraction in the net interest margin due to rising funding costs. Additionally, weaker credit metrics were observed, including an increase in net charge-offs and nonperforming loans, which were primarily driven by the commercial and industrial (C&I) and commercial real estate (CRE) sectors. Despite the core pre-provision net revenue (PPNR) slightly exceeding expectations, it fell short of the consensus forecast.
The revised guidance from Webster Financial was largely negative, with loan growth estimates for 2024 reduced due to a more selective approach in the CRE sector, aiming to lower CRE concentration levels. Moreover, while the loan pipelines have improved and there is potential to exceed current loan growth estimates in the latter half of 2024, the lowered NII guidance reflects expected interest rate cuts and peak deposit costs occurring later in the year. Despite these challenges, the company is still targeting a favorable return on assets and tangible common equity. Chiaverini’s decision to maintain a Neutral rating reflects the belief that the current market valuation adequately captures Webster Financial’s outlook, considering the updated guidance and financial metrics.

Chiaverini covers the Financial sector, focusing on stocks such as NY Community, Western Alliance, and BankUnited. According to TipRanks, Chiaverini has an average return of -3.9% and a 44.14% success rate on recommended stocks.

In another report released on April 9, Wells Fargo also maintained a Hold rating on the stock with a $50.00 price target.

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Webster Financial (WBS) Company Description:

Webster Financial Corp. operates as a holding company for Webster Bank NA. It engages in providing financial services to individuals, families and businesses. It offers equipment financing, commercial real estate lending and asset-based lending services. It operates through the following business segments: Commercial Banking, HSA Bank and Community Banking, The Commercial Banking segment includes middle market, asset-based lending, commercial real estate, equipment finance and treasury and payment solutions, which includes government and institutional banking. The HSA Bank segment offers health savings accounts, health reimbursement accounts, flexible spending accounts, and other financial solutions for healthcare. The Community Banking segment serves consumer and business banking customers primarily throughout southern New England and into Westchester County, New York. It is comprised of personal banking and business banking supported by a distribution network consisting of banking centers and ATMs, a customer care center, telephone banking and a full range of web and mobile-based banking services. The company was founded in 1986 and is headquartered in Waterbury, CT.