On Thursday, DA Davidson adjusted the price target for Northwest Bancshares, Inc. (NASDAQ:NWBI), increasing it to $13.00 from the previous $11.00, while maintaining a Neutral rating on the stock. The revision follows a performance in which the company's shares experienced a +4% rise against the KRX index since the announcement of its quarterly results, after having already seen a +2% increase year-to-date (YTD).
The firm's decision to raise the price target is based on a stronger-than-anticipated net interest income (NII) and fee revenue which helped to offset a slight decline in operating expenses. The positive results, coupled with a better-than-expected net interest margin (NIM), contributed to the firm's decision to increase their earnings per share (EPS) estimates. This outlook is based on expectations for a recovery in commercial-led loan growth following a 2Q24 dip of 5% due to paydowns.
DA Davidson has acknowledged the progress Northwest Bancshares has made in its commercial lending initiatives, particularly noting the benefits of a stronger NIM. However, the firm also pointed out that the stock is currently trading at a premium in terms of price-to-pre-provision net revenue (PPNR), price-to-earnings (P/E), and price-to-tangible book value (P/TBV) ratios when compared to what the related return profiles would support.
The expected PPNR return on average assets (ROAA) for 2025 is projected to be around 1.5%, with a return on tangible common equity (ROTCE) of approximately 11%.
Given the limited upside to the new price target, DA Davidson reiterated its Neutral stance on Northwest Bancshares shares. The adjustment reflects the firm's view on the stock's valuation relative to its projected earnings and growth trajectory.
In other recent news, Northwest Bank, based in Columbus, Ohio, has appointed Joseph Canfield as its new Chief Accounting Officer. Canfield, who brings over 25 years of experience in finance and operations across sectors like banking, manufacturing, and technology, will take up his new role at the bank.
His previous roles include Senior Vice President and Director of Accounting Operations at Huntington National Bank and Treasurer for the Huntington Foundation, with a significant tenure at PricewaterhouseCoopers LLC as a Senior Manager in the Audit practice.
In his new role, Canfield will manage the accounting operations, the Sarbanes-Oxley (SOX) program, external reporting, and accounts payable at Northwest Bank. He will also spearhead the transformation of the bank's Accounting Department, integrating new accounting systems to enhance automation and utilizing business data for more insightful and timely analysis.
Doug Schosser, Chief Financial Officer of Northwest Bank, noted that Canfield's appointment is vital for the bank's efforts to modernize accounting practices and technology. He also underscored the significance of Canfield's role in supporting the bank's growth and success, benefiting employees, customers, and shareholders.
InvestingPro Insights
Recent data from InvestingPro provides a detailed snapshot of Northwest Bancshares, Inc. (NASDAQ:NWBI), offering additional context to DA Davidson's updated price target. With a market capitalization of $1.62 billion, NWBI is trading with a P/E ratio of 15.83, which adjusts slightly to 15.27 when looking at the last twelve months as of Q2 2024. Despite a slight negative revenue growth of -5.97% during the same period, the company boasts a robust operating income margin of 30.59%.
InvestingPro Tips highlight that NWBI has received upward earnings revisions from five analysts for the upcoming period, suggesting a positive sentiment around the company's financial prospects. Furthermore, the company has a commendable track record of maintaining dividend payments for 30 consecutive years, with a current dividend yield of 6.29%, underscoring its commitment to returning value to shareholders. This is particularly relevant for investors seeking steady income streams in their portfolios.
For those interested in deeper analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/NWBI, offering further insights into NWBI's financial health and performance indicators. These tips provide valuable information for both current and potential investors to make informed decisions.
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