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According to Wells Fargo, investors should buy shares of the bankrupt regional bank Western Alliance. The firm has affirmed its overweight rating on the stock while lowering its price target to $65 from $90. However, the new price target suggests upside potential of 148.9% from Monday’s close of $26.12. “We view the risk/reward ratio as attractive to WAL as the stock trades at 60% of [tangible book value] and leave with a new renewed sense of optimism after our conversation with [management]”wrote analyst Timur Braziler in a note on Monday. In the March 9 update, total deposits increased by an impressive $7.8 billion, or 15% QoQ, while Monday’s update notes only a “moderate” outflow since then.” sell-off of regional bank stocks following the collapse of SVB Financial and Signature Bank. Brazil, however, believes Western Alliance’s higher quarterly deposit balances to date are not in line with the stock’s fall of more than 60% since March 8, and considers a run on deposits unlikely. The shares were “thrown out with the water,” Braziller said. Wells Fargo considers Western Alliance one of the “most diversified banks both in terms of product offerings and geographically”, giving it confidence to outperform amid SVB-driven volatility and higher interest rates. “Management continues to prove its ability to operate among the fastest growing banks with excellent credit quality regardless of the operating environment. We expect WAL to be one of the few institutions that won’t give up in the coming quarters, with management forecasting 13-17% growth in deposits in 2023,” Braziller wrote. Western Alliance shares rose 18.2% during pre-market trading on Tuesday, shares are down 56.1% year-to-date, Michael Bloom of CNBC.
Credit: www.cnbc.com /
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