The post-earnings pop for Western Alliance should be just the start of a sustained rebound, according to Wells Fargo. The stock jumped 24% on Wednesday. Western Alliance said this week that its deposits were recovering in April after falling 11% during the first quarter. This eased fears that the bank would see significant damage from the collapse of Silicon Valley Bank last month. Wells Fargo analyst Timur Braziler said in a Wednesday note to clients that the returning deposits and growing tangible book value of the bank suggested that Western Alliance’s stock could jump another 61%. “About as good an update as we could have hoped for, highlighted by $2B/qtr deposit and double-digit TBV growth. There is no reason why the stock should be trading below current TBV ($41.50) and eventually at our unch. $65 PT,” Braziler said. Wells Fargo has an overweight rating on the stock. WAL 1M mountain Shares of Western Alliance rebounded sharply on Wednesday. Western Alliance was one of the regional bank stocks that was hit hard after the collapse of SVB. Its shares were down 45% for the year prior to the bank’s first-quarter report on Tuesday. However, the bank seems to be seeing strength returning even in the most troubled parts of the business, according to Wells Fargo. “WAL is even seeing the return of some tech deposits, which saw a $3.3B exit immediately following the SIVB failure, and have increased $400MM since. The diverse nature of the WAL book is on full display, and we believe continued deposit growth will be the catalyst to move shares higher,” Braziler said. There is another source of concern for banks and other financial institutions, as depositors look to move their money from low interest accounts to products with higher yield. However, Braziler projects net interest margin will rebound for Western Alliance in the back half of the year. — CNBC’s Michael Bloom contributed to this report.
