Investors should pick up shares of sold-off Western Alliance Bancorp , according to Piper Sandler. Analyst Matthew Clark initiated coverage of the bank stock at overweight with a $60 price target. Clark’s price target signals shares could rally 21.9% over the next year. Western Alliance is “among the industry’s most heavily discounted bank stocks … for a top performing institution with industry leading returns, relative market strength, and a sophisticated management team,” he said in a note to clients. Clark pointed to the bank’s national business lines, which have little or no net charge-offs — a term used to describe the differences between what is due in delinquent debt and what is recovered. But he said the company may have to see more loss for multiple expansion to occur with despot growth restored. Additionally, Clark noted the company has been able to quickly get deposit growth back on track as its distanced itself from the industry turmoil that began in March. He said Western Alliance has focused on holistic and deep relationships. The bank lost nearly 40% of tech deposits as bank closures made consumers jittery. Concerns around the health of the U.S. banking sector have revved up in recent weeks as rating agencies have expressed concerned about some institutions. But Clark said a potential downgrade is “just noise” and “backward looking.” He also said deposit ratings, which reman in solid condition, are considered more important. The perceived risk of the national business lines’, particularly the mortgage banking segment, actually created cause for Clark to believe the stock should trade at a discount to peers. While he said the mortgage business may not see a recovery, it is near a cyclical trough and should at least be relatively stable in the second half of this year. Western Alliance shares have fallen more than 17% this year. WAL YTD mountain Western Alliance’s 2023 — CNBC’s Michael Bloom contributed to this report
This regional bank stock can rally more than 20%, Piper Sandler says