On Monday, Stephens, a financial services firm, increased the price target for WesBanco (NASDAQ: NASDAQ:WSBC) shares to $34.00, up from the previous target of $33.00. The firm has maintained an Equal Weight rating on the stock. This adjustment follows WesBanco's recent earnings report, which exceeded expectations.
WesBanco reported an operating EPS of $0.56, surpassing the consensus estimate of $0.51 and Stephens' own forecast of $0.47. The bank's core pre-provision net revenue (PPNR) of $52.3 million was nearly in line with the consensus estimate of $52.4 million and slightly higher than Stephens' prediction by $0.02 million.
The bank's net interest income (NII) exceeded consensus estimates by $0.02, while core fees were $0.03 below expectations. Expenses, however, were $0.01 better than anticipated. The net interest margin (NIM) for WesBanco remained stable quarter over quarter at 2.95%, which was a bit higher than the Street's expectation of 2.94% and Stephens' estimate of 2.92%. The NIM is projected to increase by a few basis points in the fourth quarter.
Despite revising the pro forma NIM for PFC lower, which resulted in a slight decrease of about 1% in the estimated EPS and PPNR for the years 2025 and 2026, the outlook remains positive. Stephens highlighted that the PFC merger accelerates the earnings potential of WesBanco, which has been characterized as an under-earning liability-sensitive bank.
The anticipated return profile for 2026 is attractive, with projected returns on assets (ROA), PPNR, and return on tangible common equity (ROTCE) of 1.28%, 1.82%, and 18%, respectively.
The firm reiterated its Equal Weight rating, noting that there is a positive 13% difference between the current share price and the new $34.00 price target.
In other recent news, WesBanco, Inc. reported a strong financial performance in its third quarter 2024 earnings call. The company announced a net income of $36.3 million, or $0.56 per share, and significant growth in loans and deposits.
Loans increased by $1.1 billion while deposits rose by $750 million year-over-year. WesBanco also successfully raised $200 million in common equity, improving its tangible common equity ratio to 8.84%.
The acquisition of Premier Financial Corp. is expected to close in the first quarter of 2025. The company's non-performing assets decreased to 0.17% of total assets, indicating strong credit quality. Non-interest income grew by 6% to $31.3 million, driven by record assets under management and brokerage account value. However, non-interest expenses rose by 2% to $99.2 million.
These recent developments show WesBanco's commitment to growth and operational efficiency. The company expects continued loan growth and a modest improvement in net interest margin. It is also projected to realize $4 million in annual savings from the consolidation of 11 branches. Despite a decrease in non-interest income due to a negative adjustment in swap fees, WesBanco remains optimistic about its future performance.
InvestingPro Insights
To complement Stephens' analysis of WesBanco (NASDAQ: WSBC), recent data from InvestingPro provides additional context for investors. WesBanco's P/E ratio stands at 14.54, suggesting a relatively modest valuation compared to some peers in the banking sector. This aligns with the firm's Price to Book ratio of 0.76, indicating that the stock may be trading below its book value.
InvestingPro Tips highlight WesBanco's strong dividend history, having raised its dividend for 13 consecutive years and maintained payments for 48 years. This commitment to shareholder returns is further emphasized by a current dividend yield of 4.75%, which may be attractive to income-focused investors.
However, it's worth noting that InvestingPro Tips also indicate that two analysts have revised their earnings downwards for the upcoming period, and the company's net income is expected to drop this year. This information adds nuance to Stephens' positive outlook and may explain the Equal Weight rating despite the increased price target.
For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips for WesBanco, providing a deeper dive into the company's financial health and market position.
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