Washington Federal (WAFD) Stock Forecast & Price Target

WaFd is viewed positively because fee income jumped to $38.3M from $20.6M last quarter, boosted by a $16.4M gain on sale of legacy SFR loans, while core noninterest expense rose only 6.4% to $117M, slightly above consensus but still manageable. Its announced $3.9B reverse merger with EverBank looks strategically compelling, with management guiding to 29% 2027 EPS accretion, $135M of annual pretax cost savings, and more than 15% ROATCE by 2027, supported by a shift toward 74% commercial loans and 73% non-time deposits. The combination of runoff from lower-yield residential mortgages, redeployment into higher-yield commercial lending, and a path toward a 45% efficiency ratio supports a stronger profitability mix and faster progress toward long-term targets.

WaFd is facing a deteriorating fundamental profile as loan sales drove a sharp balance-sheet contraction, with EOP loans down 19% LQA and active loan types down 5% LQA, both below expectations and management’s +8-12% guidance. The shift helped fund deposit growth of 7.4% LQA and reduce borrowings, but it also reduced earning assets and left core deposits at 60% of the mix, while further sales are likely to keep AEA only flat to slightly higher next quarter. At the same time, the outlook worsened as FY27/FY28 EPS estimates were cut to $3.22/$3.11 on a smaller balance sheet and higher operating expenses, and the 0.84% PSC ROA implies below-average profitability.