Wells Fargo Upgrades East West Bancorp (EWBC) to Outperform

Wells Fargo upgraded East West Bancorp (NASDAQ: EWBC) from Market Perform to Outperform with a $22-$24 valuation range.

The firm comments, "With solid earnings growth prospects and a robust capital return policy, EWBC shares offer an attractive risk-reward proposition, in our view. Historically the bank has demonstrated a strong ability to grow the balance sheet in keeping with its mandate as the financial bridge between East and West. More recently, run-off from the covered loan book has offset organic loan growth. But, we view the investment thesis through a different lens. Loan growth should rebound in 2013 with contribution from CRE, commercial, and resi lending. Provision leverage and lower expenses should drive ROTCE again to mid-teens, highest in our small/mid cap coverage. With shares trading at only 9.9x our 2013 EPS estimate, we believe current valuation offers an attractive entry point. Meanwhile, a 3% yield reflecting the 2013 dividend increase provides downside protection."

For an analyst ratings summary and ratings history on East West Bancorp click here. For more ratings news on East West Bancorp click here.

Shares of East West Bancorp closed at $19.71 yesterday.

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