Sterne Agee Sees 15% Upside In Washington Federal (WFSL)

Sterne Agee has a Buy rating and a $18 price target on shares of Washington Federal WFSL. In a note to clients, Sterne Agee writes, "Our updated thesis is WFSL has limited downside from present levels (trading at 1.1x TBV) and the primary catalyst of improving credit quality remains intact. However, the shares have declined with both market sentiment away from liability-sensitive thrifts and an earnings report that disappointed due to a decline in pre-provision earning power and lack of credit leverage despite lower NPAs (the loan loss reserve increased 8bp to 2.0%). We believe sentiment is overly negative on this name due to concerns over other thrift stories with less positive fundamentals, and note WFSL has a loan/deposit ratio of 93%, only has 23% of funding from borrowing sources, and TCE of 12%." Shares of WFSL are up 32 cents in early Friday trading to $15.96, a gain of 2.05%.