Credit Trends Improve At WBS
Analysts at RBC Capital Markets reiterate their “outperform” rating on Webster Financial Corp (NYSE: WBS), while reducing their estimates for the company. The target price for WBS is set to $17.
Webster Financial has reported its 4Q core EPS at ($0.25), as compared to ($2.28) a year earlier and ($0.39) in the prior quarter. We believe the Company should experience reasonable commercial loan growth in its banking footprint in 2010 (especially relative to the decline in the fourth quarter), net interest margin expansion will remain elevated through 2010 and continue to focus on managing its overhead through the OneWebster initiative, which will propel the stock price closer to book value. We anticipate that asset quality deterioration in the form of nonperforming assets have likely peaked in the fourth quarter 2009. Additionally, the company should benefit from a return to profitability in the third quarter 2010, which will optically provide a boost to the stock. We would advise investors to establish or add to positions on any pullbacks,” the analysts say.
RBC Capital Markets has reduced its EPS estimate for 2010 from $0.20 to $0.15, due mainly to “an elevated level of credit costs.”
