On Friday, Westamerica Bancorp (NASDAQ: WABC) received an updated price target from Piper Sandler, now set at $57.00, an increase from the previous target of $50.00. The firm maintained a Neutral rating on the stock.
The adjustment followed the announcement of Westamerica's second quarter 2024 earnings per share (EPS) of $1.33, slightly surpassing both Piper Sandler's estimate by one cent and the consensus estimate by three cents.
The bank's performance was notable as it did not record a provision for credit losses, which was a positive variance of one cent per share compared to Piper Sandler's forecast of a $0.4 million provision. This decision was backed by strong credit metrics. Additionally, fee income for Westamerica was marginally higher than expected, contributing to the positive results.
However, the bank's net interest income (NII) was slightly below expectations by one cent due to a smaller earning asset base than anticipated. Moreover, the net interest margin experienced a decline of 15 basis points, settling at 4.15%, compared to Piper Sandler's prediction of 4.13%. This margin contraction was one of the few areas where Westamerica did not meet the forecasted figures.
Operating expenses for Westamerica also exceeded expectations by one cent, impacting the financial results for the quarter. Despite these increased costs, the bank's overall financial performance for the second quarter was strong enough to warrant a higher price target from Piper Sandler. The firm's maintained Neutral rating suggests a cautious optimism regarding Westamerica's stock potential following the latest financial outcomes.
"In other recent news, Westamerica Bancorporation (NASDAQ:WABC) has announced several noteworthy developments. The company has appointed Anela Jonas as its new Chief Financial Officer, succeeding John "Robert" Thorson, who will continue as Treasurer and Treasury Division Manager. This reshuffle is part of the company's ongoing corporate governance and management strategy.
Furthermore, financial firms Keefe, Bruyette & Woods and Piper Sandler have revised their outlooks for Westamerica Bancorporation. Keefe, Bruyette & Woods has reduced its price target for the company to $57.00, citing a decrease in revenues and lower earnings estimates.
Similarly, Piper Sandler has cut its price target to $50, following a lower-than-anticipated net interest income in the company's first-quarter earnings report for 2024. The firm also expects lower margins and fee income for the bank.
In addition, the company has welcomed Martin Camsey to its board, assigning him to the Audit and Employee Benefits committees. These recent developments provide investors with a snapshot of the current state of affairs at Westamerica Bancorporation."
InvestingPro Insights
Following Westamerica Bancorp's (NASDAQ: WABC) recent performance report and Piper Sandler's updated price target, insights from InvestingPro provide additional context. With a market capitalization of $1.48 billion and a P/E ratio of 9.41 as of Q1 2024, Westamerica is positioned as a value play, particularly when considering its low PEG ratio of 0.68, indicating potential for growth relative to earnings.
An InvestingPro Tip highlights that Westamerica has raised its dividend for an impressive 31 consecutive years, signaling a strong commitment to shareholder returns. Additionally, the bank's recent price performance has been robust, with a 17.5% return over the last month and a 19.81% return over the last three months, showcasing investor confidence in the bank's trajectory.
Investors should note that while Westamerica has experienced weak gross profit margins, analysts predict profitability for the year, and the bank has been profitable over the last twelve months. For those interested in deeper analysis and more InvestingPro Tips, there are additional insights available on InvestingPro, and you can use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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