On Thursday, DA Davidson increased its price target for WSFS Financial (NASDAQ:WSFS) to $68.00, up from the previous $59.00, while maintaining a "Buy" rating on the stock. The firm highlighted WSFS Financial's robust net interest margin (NIM), which is expected to benefit from sustained higher interest rates and a strong performance in fee-based businesses.
WSFS Financial's pre-provision net revenue (PPNR) matched expectations, attributed to higher fees that balanced out weaker net interest income (NII) and operating expenses.
Despite this, shares experienced a 3% drop compared to the KBW Regional Banking Index (KRX) following the report, after previously outperforming the index with an 18% year-to-date advance.
The firm's decision to raise the earnings per share (EPS) forecast is based on second-quarter buybacks, which reduced outstanding shares by 1.5%, and a more optimistic outlook for 2024, anticipating a return on assets (ROA) of 1.25%.
WSFS Financial's above-peer returns, including approximately 2% PPNR return on assets (ROA) and around 15% return on tangible common equity (ROTCE), were also noted as factors supporting a potential increase in the stock's valuation.
DA Davidson underscored the significant role of fee income, which constitutes over 30% of net revenue, in justifying an expansion of the stock's multiple. This assessment is made in light of the company's tangible book value (TBV) excluding accumulated other comprehensive income (AOCI), which is approximately 1.6 times. The firm reiterated its "Buy" rating, signaling confidence in WSFS Financial's future performance.
In other recent news, WSFS Bank, a subsidiary of WSFS Financial Corporation, has made significant strides in its financial performance and strategic growth. The bank recently announced the appointment of John Heiser as Senior Vice President and Senior Private Banking Relationship Manager. Heiser's wealth management expertise, honed over 20 years, is expected to enhance WSFS's capabilities in serving its affluent client base.
Following its second-quarter earnings report, WSFS Financial Corporation saw its price target adjusted by Piper Sandler and Stephens. The company's Q2 earnings per share (EPS) of $1.16, adjusted to $1.08 after accounting for one-time items, exceeded both Piper Sandler's and the consensus estimate of $1.04.
This earnings beat was primarily due to a 13% quarter-over-quarter increase in operating fees, driven by gains in WSFS's Cash Connect business and wealth management segments.
Stephens raised the price target for WSFS Financial to $62.00, maintaining an Overweight rating on the stock. The firm's revised price target reflects an improved return on assets (ROA) expectation of 1.25%, up from the previous estimate of 1.20%. This adjustment followed WSFS Financial's reported operating earnings per share (EPS) of $1.08, which exceeded the consensus estimate.
Lastly, WSFS Financial Corporation reported strong Q2 results, with core earnings per share reaching $1.08 and a core return on assets of 1.25%. The company's Wealth Management and Cash Connect divisions were notable contributors to the 13% quarterly and 28% annual increase in core fee revenue.
Despite a decrease in the commercial loan pipeline, WSFS remains optimistic about achieving mid-single-digit loan growth for the full year. These are the latest developments for WSFS Financial Corporation.
InvestingPro Insights
DA Davidson's recent price target increase for WSFS Financial is underscored by a couple of key metrics and analyst actions that reflect the company’s financial health and future prospects. With a market capitalization of $2.98 billion and a P/E ratio that stands at a competitive 11.25, WSFS Financial shows signs of being a potentially undervalued player in the financial sector. Moreover, the company's price/book value over the last twelve months as of Q2 2024 is a modest 1.2, suggesting that the stock might be trading at a reasonable price relative to its book value.
Two InvestingPro Tips that are particularly relevant to WSFS Financial's outlook include: the company has raised its dividend for 10 consecutive years, and analysts have revised their earnings upwards for the upcoming period. These tips not only indicate a stable and potentially growing income stream for investors but also signal confidence among analysts in the company's financial performance going forward. It's worth noting that WSFS has maintained dividend payments for 27 consecutive years, reinforcing its commitment to shareholder returns.
For investors looking for more detailed analysis and additional insights, there are more InvestingPro Tips available at: https://www.investing.com/pro/WSFS. These tips can provide a deeper understanding of WSFS Financial's market position and future potential, which may be valuable for making informed investment decisions.
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