Citi analyst has updated the financial outlook for East West Bancorp (NASDAQ: NASDAQ:EWBC), raising the price target from $103.00 to $109.00, while reiterating a Buy rating for the company's stock.
The adjustment follows the company's recent quarterly performance which, according to the analyst, surpassed the market's apprehensions, particularly regarding growth and net interest income (NII) guidance.
The analyst acknowledged that while expectations for growth in the near term are moderately subdued, the strength of East West Bancorp's asset-sensitive balance sheet should sustain the net interest margin (NIM) at its current levels.
This is anticipated as the costs associated with the company's certificate of deposit (CD) portfolio decrease and certain swap-related headwinds are expected to diminish in February.
In light of the company's progress toward exceeding $100 billion in assets, the analyst has slightly increased the estimated expense base to account for the anticipated growth. The revised outlook also takes into consideration East West Bancorp's potential to resume share repurchases following the upcoming election and the subsequent clarity it may provide for economic activities projected for 2025.
In other recent news, East West Bancorp has outperformed third-quarter earnings and revenue expectations. The company reported a net income of $299 million, or $2.14 per diluted share, surpassing the analyst consensus estimate of $2.06 per share.
Revenue was reported at $657 million, beating expectations of $642.2 million. In comparison to the same quarter of the previous year, revenue increased by 3%, with growth in both net interest income and fee income.
The company's book value per share increased by 6% quarter-over-quarter and 19% year-over-year to $55.30. Furthermore, total assets also saw a 3% increase from the previous quarter, reaching $74.5 billion. These developments are part of recent trends in the company's performance.
InvestingPro Insights
East West Bancorp's recent performance aligns with the positive outlook presented by Citi analyst Benjamin Gerlinger. According to InvestingPro data, the company's stock is trading near its 52-week high, with a price at 96.87% of its peak. This strength is further reflected in the impressive 77.41% total return over the past year.
InvestingPro Tips highlight that East West Bancorp has maintained dividend payments for 26 consecutive years and has raised its dividend for 6 consecutive years. This consistent dividend history, coupled with a current dividend yield of 2.43%, underscores the company's commitment to shareholder returns, which may be attractive to income-focused investors.
The company's P/E ratio of 11.51 suggests that the stock may be reasonably valued, especially considering the strong returns and positive analyst sentiment. Additionally, InvestingPro Tips indicate that 6 analysts have revised their earnings upwards for the upcoming period, aligning with Gerlinger's optimistic view on the company's future performance.
For investors seeking more comprehensive analysis, InvestingPro offers 5 additional tips that could provide further insights into East West Bancorp's financial health and market position.
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