On Monday, Stephens, a financial services firm, raised the price target for WSFS Financial (NASDAQ:WSFS) shares to $62.00, up from the previous target of $54.00, while maintaining an Overweight rating on the stock.
The adjustment follows WSFS Financial's reported operating earnings per share (EPS) of $1.08, which exceeded the consensus estimate of $1.04. The beat was attributed to a lower provision, with net charge-offs (NCOs) coming in at 44 basis points below expectations.
WSFS Financial's core pre-provision net revenue (PPNR) of $104.5 million was nearly on par with consensus estimates, with higher fee income contributing positively, though these gains were balanced by a slight decrease in net interest income (NII) and an increase in expenses. Looking ahead, the company has reiterated its financial guidance for fiscal year 2024, with an improved return on assets (ROA) expectation of 1.25%, up from the previous estimate of 1.20%.
Despite the inherent volatility in credit for WSFS, which is considered a higher beta stock, the second quarter trends were viewed positively and are expected to support the lower end of the company's guidance range.
In light of these developments, Stephens has raised their estimates for PPNR by approximately 1% for the fiscal years 2024 and 2025. The firm maintains its operating EPS estimate for 2024 at $4.20 and has increased the estimate for 2025 to $4.35, citing a more constructive outlook on fee income.
The revised price target of $62 reflects WSFS Financial's trading at approximately 13 times the estimated earnings for 2025. This valuation is considered a modest premium, considering the company's above-peer ROA of 1.25% and PPNR of 2.00%.
The Overweight rating has been reiterated based on the financial institution's performance metrics and the potential for returns on tangible common equity (ROTCE) that exceed peer levels.
InvestingPro Insights
WSFS Financial's recent performance has prompted analysts to take a closer look at its financial metrics and growth prospects. According to InvestingPro data, WSFS Financial currently holds a market capitalization of $3.37 billion and a price-to-earnings (P/E) ratio of 12.61, which adjusts slightly to 12.32 when looking at the last twelve months as of Q2 2024. The company's revenue growth for the same period stands at 3.52%, with a notable quarterly revenue growth of 5.73% in Q2 2024. This suggests a steady upward trajectory in the company's earnings capability.
InvestingPro Tips highlight that WSFS Financial has maintained its dividend payments for an impressive 27 consecutive years, indicating a strong commitment to shareholder returns. Additionally, three analysts have revised their earnings upwards for the upcoming period, reflecting a positive outlook on the company's financial health. WSFS Financial is also trading near its 52-week high, with a price that is 97.05% of this peak, signaling investor confidence.
For investors seeking more detailed analysis and additional InvestingPro Tips, they can explore further at Investing.com/pro/WSFS. Currently, there are 9 more tips available on InvestingPro, providing a comprehensive view of WSFS Financial's performance and potential. Interested readers can also take advantage of a special offer by using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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