2023-05-15 11:55:25 ET
Piper Sandler upgraded Washington Trust Bancorp ( NASDAQ: WASH ) to Neutral from Underweight as earnings challenges are now reflected in its valuation.
It lowered its rating on Washington Trust ( WASH ) to Underweight last month following its softer-than-expected Q1 results. "We expected NIM to be under more pressure than peers as a result of a relatively high loan-to-deposit ratio (112%)," said analyst Mark Fitzgibbon. "We thought WASH would remain more dependent on higher-cost brokered deposits and borrowings."
Also, Fitzgibbon expected fee revenues to remain challenged by industry mortgage banking headwinds and some idiosyncratic wealth management issues. "These points of our thesis remain the same. However, WASH's valuation improved meaningfully over the past month warranting an upgrade."
Fitzgibbon noted that the stock's selloff has been more pronounced than peers, declining ~51% YTD.
Price target was cut to $26 from $27, implying 15.1% potential upside to its last close.
Piper Sandler's stance is in line with neutral sell-side ratings , but contrasts SA Quant's Sell rating.
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Piper Sandler upgrades Washington Trust Bancorp on improved valuation