On Monday, Keefe, Bruyette & Woods adjusted its price target on shares of Westamerica Bancorp (NASDAQ:WABC) to $57.00, a decrease from the previous target of $58.00. The firm maintained its Market Perform rating on the bank's stock.
The revision comes in the wake of Westamerica Bancorp's strong deposit base, which includes 47% in non-interest bearing (NIB) deposits and a total cost of interest-bearing deposits (IBD) at just 0.30%. These figures underscore a 5% cumulative cycle-to-date beta. Despite this, the bank's assets have largely adjusted to higher interest rates due to a significant portion of assets being in floating rate form, and any additional pressure on deposits is expected to impact the bank's margin.
Following the company's recent quarterly report, Keefe, Bruyette & Woods has modestly lowered its earnings estimates for Westamerica Bancorp. The firm points to a reduction in revenues and emphasizes that the future trajectory of estimates will hinge on the stability of the deposit base and the interest rate environment. This is particularly pertinent given Westamerica Bancorp's sensitivity to changes in asset rates.
The updated price target of $57 reflects a conservative outlook on the bank's financial performance, taking into account the current economic factors affecting its revenue and margin. The Market Perform rating suggests that the firm views the stock as likely to perform in line with the broader market indices.
InvestingPro Insights
As Westamerica Bancorp (NASDAQ:WABC) adapts to the evolving financial landscape, key metrics from InvestingPro provide a deeper understanding of the company's current position. With a market capitalization of $1.24 billion and a P/E ratio standing at a modest 7.7, the bank presents an interesting valuation case. Notably, the P/E ratio has adjusted slightly to 7.9 over the last twelve months as of Q1 2024, suggesting stability in earnings valuation.
InvestingPro Tips highlight that Westamerica Bancorp has a commendable track record of raising its dividend for an impressive 31 consecutive years, underlining a commitment to shareholder returns. Moreover, the company's dividend yield as of early 2024 stands at 3.76%, with a dividend growth of 4.76% over the last twelve months, which may appeal to income-focused investors. Analysts also predict that the company will remain profitable this year, despite expectations of a net income drop.
For investors seeking comprehensive analysis and additional insights, there are more InvestingPro Tips available for Westamerica Bancorp at https://www.investing.com/pro/WABC. To enhance your investing strategy, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, providing you with access to a wealth of data and expert analysis to inform your investment decisions.
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