Washington Federal (WAFD) Stock Forecast & Price Target

WaFd Inc has demonstrated positive financial momentum, highlighted by a net interest margin (NIM) expansion of 10 basis points quarter-over-quarter to 2.55%, reflecting better management of interest-bearing deposit costs and an increase in backbook loan repricing. The company's operating margin also improved by 10 basis points sequentially, benefitting from favorable conditions that include reduced costs associated with interest-bearing deposits and stronger performance in new loan originations. Additionally, the upcoming maturity of $3.4 billion in time deposits presents a strategic opportunity for further enhancement of funding costs, positioning WaFd favorably for future growth despite the planned exit from residential mortgage originations.

WaFd Inc faces significant challenges, reflected in its lower profitability metrics, boasting a return on assets (ROA) of 77 basis points and a return on tangible common equity (ROTCE) of 9.6%, which are below those of its peers. Additionally, the company has revised its loan growth expectations downward, projecting only 0.5% for FY25 compared to a prior estimate of 4%, signaling a muted growth environment exacerbated by the current uncertainty in loan originations. This outlook, combined with the strategic decision to allocate more capital towards share buybacks instead of expansion, underlines a negative sentiment about WaFd's financial stability and growth prospects in the near term.