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Westamerica Bancorp (WABC) - Bear of the Day

Posted: 11/14/2012 12:00:00 AM
Referenced Stocks: WABC

Westamerica Bancorp's ( WABC ) third quarter earnings were on par with the Zacks Consensus Estimate. Results were adversely impacted by lower net interest income. We believe that a weak interest rate scenario and low investment returns will restrict any significant bottom-line improvement in the near term.

Westamerica's average interest earnings assets of $4.11 billion in the first nine months of 2012 declined 0.4% from the prior-year period. We don t expect any significant improvement in interest earnings assets in the near term, given the weak interest rates and low investment returns amid the ongoing sluggish economic recovery.

Our six-month target price of $40.00 equates to about 13.6x the Zacks Consensus Estimate for 2012. Combined with the $1.48 per share annual dividend, this price target implies an expected negative total return of 7.6% over that period, which is consistent with our long-term Underperform recommendation on the shares.

WESTAMER BANCP (WABC): Free Stock Analysis Report

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