On Thursday, DA Davidson adjusted its outlook on WesBanco (NASDAQ:WSBC) stock, reducing the price to $35.00 from the previous $36.00 while retaining a Buy rating.
The adjustment follows WesBanco's recent financial results, which showed a lower-than-expected net interest income (NII). Despite robust growth in loans by 8% and deposits by 10%, the company's net interest margin (NIM) did not meet expectations, leading to a 3% underperformance against the KRX on the day of the announcement.
The bank's pre-provision net revenue (PPNR) missed targets due to weaker fee income and NII, which did not balance out operating expenses. However, DA Davidson noted WesBanco's commercial strength in deposit gathering, suggesting that this could indicate future fee growth driven by Treasury Management sales.
The firm has revised its 2024 estimates downward due to the weaker NIM, which is expected to counterbalance new expense initiatives. Nonetheless, DA Davidson sees potential for growth in WesBanco's future trajectories, maintaining its 2025 estimates unchanged. The analyst believes that the current share price, trading at approximately 1.1 times the 2025 estimated tangible book value (TBV), does not fully reflect the company's growth prospects and its low-beta credit profile.
In conclusion, DA Davidson reaffirmed its Buy rating on WesBanco shares, indicating a belief in the bank's ability to navigate the challenges and capitalize on its strengths in the coming years.
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