UPDATE: Stephens Upgrades Webster Financial (WBS) to Overweight
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Stephens analyst Matt Breese upgraded Webster Financial (NYSE: WBS) from Equal Weight to Overweight, PT $60.00 (from $56.00).
The analyst comments "Following this week’s announcement that WBS and STL were engaged in a MOE, set to create a $63 billion bank spanning Boston to NYC, we upgraded shares to Overweight (from Equal-Weight), increased our 2022 estimates by +24%, and increased price target to $60 from $56. The combined franchise is expected to have one of the highest profitability profiles amongst all regional banks with a 2022 ROA/ROTCE of ~1.45% and +16% vs. peers at ~0.90%-0.95% and ~11%, respectively. On top of exceptionally strong financial attributes, highlighted by +20% EPS accretion and minimum TBV dilution, we think the deal weds a like-minded commercial/consumer banking effort and creates a strong combination of differentiated asset classes on the STL side with a best-in-class deposit franchise on the WBS side. In short, despite the stock’s reaction and concern on the dilution to the WBS story (particularly HSA), at <10x EPS we think shares are undervalued."
Shares of Webster Financial closed at $51.00 yesterday.
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