In a report released yesterday, Manan Gosalia from Morgan Stanley maintained a Hold rating on Webster Financial, with a price target of $77.00.
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Manan Gosalia has given his Hold rating due to a combination of factors that reflect a stable yet cautious outlook for Webster Financial. The company’s credit metrics remained steady in the third quarter, with nonperforming and commercial classified loans showing no significant changes, and net charge-offs maintained at 28 basis points. Additionally, management highlighted a reduction in criticized assets and an improvement in risk ratings, indicating a positive trajectory for credit quality in the upcoming quarters.
Despite these positive indicators, there are factors that temper enthusiasm. The exposure to non-deposit financial institutions (NDFI) is considered relatively low risk, with a significant portion in fund banking, which has historically shown no nonaccrual or classified loans. However, the slight decrease in the fourth quarter earnings per share estimate due to higher expenses, alongside unchanged estimates for the following years, suggests a balanced view on the stock’s potential performance. These elements collectively support the decision to maintain a Hold rating.
Gosalia covers the Financial sector, focusing on stocks such as Fifth Third Bancorp, KeyCorp, and Zions Bancorporation National Association. According to TipRanks, Gosalia has an average return of 7.5% and a 55.03% success rate on recommended stocks.