Washington Federal price target raised to $33 from $29 at DA Davidson

DA Davidson raised its price target for Washington Federal (WAFD) to $33 from $29, maintaining a Neutral rating, citing improved net interest margin (NIM) in Q3 and a less risky path to its unchanged FY2026 EPS forecast. The firm highlighted positive aspects such as buyback commitment and an upward NIM trajectory, despite acknowledging some growth concerns. Separately, WaFd Inc. declared a $12.1875 per share dividend for its Series A Preferred Stock, payable July 15, 2025, reinforcing its commitment to shareholder returns.

Analysis

DA Davidson has raised its price target on Washington Federal (WAFD) to $33.00 from $29.00 while reiterating a Neutral rating, signaling a cautiously optimistic outlook. The revised target is based on the bank's third-quarter performance, which revealed an improved net interest margin (NIM) that provides a lower-risk path to its fiscal 2026 earnings per share forecast, even amidst slower growth. Positive factors cited include a firm buyback commitment, steady expense management, and the upward trajectory for NIM. However, these strengths are tempered by offsetting concerns over a lack of growth and an increase in problem loans, which the analyst firm currently views as manageable short-term issues. Separately, WaFd Inc. reinforced its commitment to shareholder returns by declaring a dividend of $12.1875 per share for its Series A Preferred Stock, payable in July 2025, a move that supports its capital return narrative but does not directly impact common stockholders.

Key Decisions for Investors

• Given the Neutral rating and the stock trading near fair value at a P/E of 11.3x, investors should consider the limited upside to the new $33 price target against the clear risks of slow growth and rising problem loans.
• Key metrics to monitor in future earnings are the net interest margin trend and credit quality indicators, as the investment thesis hinges on NIM expansion continuing to outweigh any deterioration in the loan portfolio.
• Investors should recognize that the recent dividend declaration is for Series A Preferred Stock, not common stock, and therefore should assess the company's capital return policy for common shareholders based on its broader buyback commitments and separate dividend announcements.