Stephens, a financial services firm, raised the price target on shares of East West Bancorp (NASDAQ: NASDAQ:EWBC) to $104.00, up from the previous $91.00.
The firm maintained its Overweight rating on the bank's stock.
The adjustment came after East West Bancorp reported its third-quarter operational earnings per share (EPS) at $2.14, which surpassed both Stephens' estimate of $2.08 and the consensus estimate of $2.06.
The bank's pre-provision net revenue (PPNR), excluding amortization, showed a 4.5% increase which was attributed to a 2.3% net interest income (NII) beat, a 3.2% fee income beat, and a 1.2% core expense beat.
Analysts had expressed concerns prior to the earnings release that East West Bancorp might experience a greater mismatch between deposit and asset repricing compared to its peers.
Nevertheless, the third-quarter results demonstrated a better-than-expected pace of repricing, both in the third quarter and into the fourth quarter to date, as well as stronger-than-anticipated balance sheet growth. This led to the reaffirmation of the company's NII guidance.
In other recent news, East West Bancorp has been making significant strides in its financial performance. The company's third-quarter 2024 earnings report showed an operating earnings per share (EPS) of $2.09, outperforming both the BofA and consensus estimates. This impressive performance has led BofA Securities to maintain a Buy rating on East West Bancorp, while raising the price target to $110 from $99.
The revised price target is based on upward earnings estimates for the fourth quarter of 2024 and the full year 2025, reflecting a more resilient net interest margin and slightly improved fee revenue growth expectations. In addition, East West Bancorp's CEO, Dominic Ng, announced a net income of $299 million, or $2.14 per diluted share, in the third-quarter earnings call, marking a 1% quarter-over-quarter increase in average loans and a 3% rise in average deposits.
These recent developments also include a $20 million (4%) increase in the bank's net interest income from the previous quarter and a record fee income of $81 million, up 6% quarter-over-quarter.
The bank anticipates a full-year loan growth of 2% to 4% and a similar decline in net interest income. East West Bancorp continues to navigate the current economic landscape effectively, prioritizing long-term stability and shareholder value.
InvestingPro Insights
East West Bancorp's recent performance aligns with several InvestingPro metrics and tips, providing additional context to Stephens' positive outlook. The bank's P/E ratio of 11.42 suggests it may be undervalued relative to its earnings, which could support the increased price target. This is further reinforced by the company's strong financial health, as indicated by its profitable status over the last twelve months and analysts' predictions of profitability for the current year.
InvestingPro Tips highlight that East West Bancorp has raised its dividend for 6 consecutive years and maintained dividend payments for 26 consecutive years, demonstrating a commitment to shareholder returns. This is complemented by a current dividend yield of 2.3% and a notable dividend growth of 14.58% in the last twelve months.
The bank's recent performance is also reflected in its market behavior, with InvestingPro Data showing a robust 88.04% price total return over the past year and trading at 96.64% of its 52-week high. These metrics align with the InvestingPro Tip indicating a strong return over the last month and trading near its 52-week high.
For investors seeking more comprehensive analysis, InvestingPro offers 11 additional tips for East West Bancorp, providing a deeper understanding of the company's financial position and market performance.
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