On East West Bancorp, Chiaverini says his downgrade is more of a macro call than a company-specific call, driven by potentially slowing growth in a recessionary environment. As previously stated, Chiaverini believes we could be six months into an 18 to 24 month downturn.
The stock traded around $64 on Tuesday, in a 52-week range of $61.65 to $93.51. Shares are down over 16% year to date. The dividend yield is 2.5%.
Winter cut the Outperform rating on KeyCorp. (NYSE: KEY) to Neutral and lowered the $26 price target to $20. The implied upside from the most recent closing price of $17.49 is 14%.
Here too Winter sees increased risks of recession as the Fed on track to aggressively raise rates to combat inflation pressures. As per all these analyst calls, this recessionary environment will have a negative impact on the entire bank group. KeyCorp’s balance sheet positioning is less favorable relative to its regional bank peers. Winter notes that KeyCorp is less asset sensitive and has a lower level of excess cash as a percentage of average earning assets, which could pressure net interest income if deposit outflows are greater than expected.
KeyCorp stock has a 52-week trading range of $16.69 to $27.17, and it traded near $17 a share on Tuesday. The stock is down about 24% year to date. It has a dividend yield of 4.5%.
Western Alliance Bancorp
On Western Alliance Bancorporation (NYSE: WAL), Chiaverini downgraded the shares to Neutral from Outperform. The $80 price target implies upside of 10% from the most recent closing price of $72.65. Chiaverini again made this downgrade as a macro call on the industry, considering the recessionary environment going forward.
The stock traded around $70 on Tuesday, in a 52-week range of $68.42 to $124.93. Shares are down over 33% year to date. The dividend yield is 1.9%.
Webster Financial Corp. (NYSE: WBS) was the last company in the group, and Chiaverini made the call again. Wedbush downgraded the stock to Neutral from Outperform and has a $50 price target. That implies upside of 15% from the most recent closing price of $43.45.
Yet again, Chiaverini implied that this was more of a macro call, given the recessionary environment and the likelihood of the Fed raising interest rates and the negative impact this will have on the economy.
Webster Financial stock has a 52-week trading range of $41.22 to $65.00, and it traded near $41 a share on Tuesday. The stock is down 23% year to date. It has a dividend yield of 3.6%.
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