The downfall of SVB Financial Group (NASDAQ:SIVB) swept away billions of dollars from the market cap of regional banks. Despite the reassurances from the regulators, investors continue to flee bank stocks. Due to negative investor sentiment, shares of Western Alliance Bancorporation (NYSE:WAL) plunged over 60% before closing 47.06% lower on March 13. While WAL stock lost substantial value, Wall Street is bullish about its prospects and sees stellar upside potential.
Management Shores Up Liquidity
While investors are fleeing bank stocks over concerns about liquidity, WAL announced that it has taken steps to bolster its liquidity position, which will enable it to meet its client funding needs and increase its borrowing capacity.
The financial institution’s CEO, Kenneth Vecchione, said that WAL’s cash reserves exceed $25 billion and are growing. Furthermore, its insured deposits now exceed 50% of total deposits.
He added that its CET1 ratio (a key ratio that determines a bank’s ability to withstand financial distress) stood at approximately 7.9%, which is better than its peers and shows the strength of the bank’s fundamentals.
Management’s efforts to calm investors are showing results. Notably, WAL stock is up about 5.3% in the after-hours of trade.
What’s the Prediction for WAL Stock?
WAL’s solid credit quality and a sharp recovery in the average deposit balances from the year-end (2022) keep analysts optimistic. WAL stock has Strong Buy consensus rating based on six Buy and one Hold recommendations.
At the same time, analysts’ average price target of $83.83 implies a solid upside potential of 220.94%.
