DA Davidson Recomends Investors Buy Shares of East West Bancorp (EWBC), Price Target Offers 39% Upside
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Price: $136.60 +0.47%
Rating Summary:
21 Buy, 5 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
21 Buy, 5 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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DA Davidson is reiterating its Buy rating and $27 price target on shares of East West Bancorp (NASDAQ: EWBC) and encourages investors to buy on the weakness.
Shares are down 11.3% since March 31 versus the Nasdaq Bank Index with is up 4%.
The firm notes that the company is not immune to the moderate pace of the economic recovery and believes that EWBC has and will continue to be more successful in growing loan balances within its legacy bank loan portfolio.
DA Davidson comments, "although a dollar-for-dollar shift between covered and non-covered loans results in a net decline in spread income, we expect net new loan growth to continue to improve at EWBC as the economy grows. Net loan growth above run-off in the covered loan portfolio would offset a larger portion of the drag on spread income as excess liquidity is utilized in funding incremental loan growth."
EWBC recorded loan sale gains of $6.3 million in Q4 2010 and $7.4 million in Q1 2011. The company's guidance looking forward doesn't include gains over the remainder of 2011, which the firm feels offers upside potential.
The company recently increased its annually dividend to $0.20 and expects to double it by early 2012. Based on our current 2012 EPS estimate of $1.81, a $0.40 annual dividend would represent a 22% payout ratio. If the stocks price stayed the same, the current yield would be 2.1%.
For more ratings news on East West Bancorp click here and for the rating history of East West Bancorp click here.
Shares of East West Bancorp closed at $19.47 yesterday.
Shares are down 11.3% since March 31 versus the Nasdaq Bank Index with is up 4%.
The firm notes that the company is not immune to the moderate pace of the economic recovery and believes that EWBC has and will continue to be more successful in growing loan balances within its legacy bank loan portfolio.
DA Davidson comments, "although a dollar-for-dollar shift between covered and non-covered loans results in a net decline in spread income, we expect net new loan growth to continue to improve at EWBC as the economy grows. Net loan growth above run-off in the covered loan portfolio would offset a larger portion of the drag on spread income as excess liquidity is utilized in funding incremental loan growth."
EWBC recorded loan sale gains of $6.3 million in Q4 2010 and $7.4 million in Q1 2011. The company's guidance looking forward doesn't include gains over the remainder of 2011, which the firm feels offers upside potential.
The company recently increased its annually dividend to $0.20 and expects to double it by early 2012. Based on our current 2012 EPS estimate of $1.81, a $0.40 annual dividend would represent a 22% payout ratio. If the stocks price stayed the same, the current yield would be 2.1%.
For more ratings news on East West Bancorp click here and for the rating history of East West Bancorp click here.
Shares of East West Bancorp closed at $19.47 yesterday.
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