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Research Alert: CFRA Reiterates Buy Opinion On Shares Of Webster Financial Corporation

05/07/2021 11:08

03:05 PM EDT, 05/07/2021 (MT Newswires) -- CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:

We keep our target at $62, 12.6x our '22 EPS estimate, below WBS' 5-yr forward P/E avg. of 15.5x, as shares will likely trade at a lower valuation multiple in the near-term given the integration risk and the deal-related volatility associated with its pending acquisition of Sterling Bancorp (STL). We lift our '21 EPS estimate by $0.08 to $4.29 and '22's by $0.64 to $4.94 to incorporate the STL acquisition (expected to close in 4Q21). We like the strategic and financial merits of the deal as it is minimally dilutive to WBS' book value at (1.2%) and substantially accretive to EPS at 23.9%, while propelling WBS into the upper half of midcap bank space with $65B in pro-forma assets/$52B in deposits. We think the larger scale of the combined co. will translate into more capital and expense dollars to plow back into the HSA business maintaining its strong growth momentum. The low-cost savings (11% of combined '22 expense base) also sets WBS up to outperform expectations over time creating value for the shareholders.