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Bank of America is jumping back on the Western Alliance Bancorp bandwagon. Analyst Ebrahim H. Poonawala resumed coverage on the bank with a buy rating. He did lower his price target to $42 from $48. The new price target still implies shares rising 36.5% from Monday’s close. “WAL does not share a ton in terms of business model and balance sheet characteristics relative to the three failed banks,” Poonawala wrote in a Tuesday note. He added that Western Alliance’s “business model [is] more resilient than perceive.” “As an example, insured deposits at WAL now equal ~80% of total deposits, well above the ~60% peer average; ~10% at SVB/Signature. The same is true for WAL’s superior profitability, which should allow the bank to better absorb the impact from higher funding costs,” the analyst continued. Bank of America dropped its rating on the stock as Western Alliance got caught up in the broader regional bank sell-off after the failure of Silicon Valley Bank and Signature Bank — which was then followed by the collapse of First Republic. Western Alliance shares have lost more than 58% over the past three months. In the premarket Tuesday, the stock was up more than 2%. WAL 3M mountain Western Alliance shares Poonawala noted that while Western Alliance “is not out of the woods yet,” the bank’s management has shown “remarkable execution thus far in navigating the post SVB turmoil.” “Strong execution, superior profitability, healthy capital levels combine for an attractive risk/reward despite the near-term uncertainty surrounding EPS power,” Poonawala added. —CNBC’s Michael Bloom contributed to this report.
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