PhilStockWorld Top Trade Alert – Jan 30 2025 – Western Alliance Bancorp (WAL)

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Yesterday, in the Webinar, we were looking for nice, trendy investments based on what's already been successful this earnings season. Boaty gave us a few to look into and WAL, who just had nice earnings, seemed like a standout bargain for a Top Trade Alert:

Finviz Chart

🚢 Here's a comprehensive analysis of Western Alliance Bancorporation (WAL):

## Current Position

**Q4 2024 Performance**

- Net income: $216.9M (up 46.6% YoY)

- EPS: $1.95 (vs $1.80 in Q3)

- Net interest margin: 3.48%

- Tangible book value: $52.27 (up 11.9% YoY)

## Growth Trajectory

**2025 Guidance**

- Net interest income: 6-8% growth from $2.62B

- Noninterest income: 6-8% increase from $543M

- Operating expenses expected to decrease

- EPS projected at $8.90

**2026 Projections**

- Revenue: $3.78B

- EPS: $10.66

- Net profit: $1.17B

## Balance Sheet Strength

**Key Metrics**

- Total deposits: $66.3B

- HFI loans: $53.7B

- Net charge-offs: 0.18%

- Non-performing assets: 0.65%

## 2027 Valuation Analysis

**Base Case Scenario**

- 2027 EPS projection: $12.40 (16% growth from 2026)

- Historical P/E range: 8-12x

- Conservative P/E multiple: 10x

- Target price: $124.00

**Bull Case**

- P/E expansion to 12x

- Target price: $148.80

**Bear Case**

- P/E compression to 8x

- Target price: $99.20

## Investment Thesis

WAL appears undervalued given its:

1. Strong earnings growth trajectory

2. Improving efficiency ratio

3. Solid asset quality metrics

4. Conservative loan portfolio management

The bank's focus on commercial lending and deposit gathering should support continued growth, while its diversified revenue streams provide stability.

## Risk Factors

- Interest rate sensitivity

- Commercial real estate exposure

- Regional banking sector challenges

- Potential regulatory changes

The 2027 base case target of $124 represents significant upside from current levels, supported by consistent earnings growth and potential multiple expansion as the bank demonstrates sustained performance.

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