Even though the Street still has its issues with banks doing large M&A, sentiment has definitely improved around Webster Financial (WBS), with the shares outperforming its peers (and the S&P 500) by a healthy margin since my last update. I'd like to think that the Street is waking up to the longer-term strategic and financial advantages of the deal, but I suspect it has more to do with Webster having above-average asset sensitivity going into a tightening cycle.
With the Sterling deal now done, I think there are a lot of positives for the coming years. I like the increased focus on commercial lending, and I think there are good specialty niches that Webster can exploit in this up-cycle. I also like that above-average rate sensitivity, as well as the prospects for post-deal cost synergies, though that will be a two or three-year process to fully realize. With double-digit annualized return potential from here, I think Webster is still a stock worth considering as it becomes one of the largest players in its footprint.
Read the full article here:
Webster Financial Offers An Appealing Menu Of Positives For This Next Cycle
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