Investors Overreacting to East West Bancorp's Involvement in China, Says UBS Analyst

UBS's Brody Preston raised their price target on East West Bancorp (NASDAQ: EWBC) by 8.2% from $61 to $66 on 2023/11/09. The analyst maintained their Strong Buy rating on the stock.

In a recent report, Preston addressed concerns surrounding East West Bancorp's involvement in China and the potential impact of its departure from the region. The analyst suggested that investors may be overreacting to these factors, stating, "Investors are 'overreacting' to East West Bancorp's involvement in China and its potential departure from the region."

Preston further highlighted that the only substantial source of capital at risk in the event of an exit would be the "Chinese bank's subsidiary." This indicates that East West Bancorp itself may not face significant direct exposure.

Moreover, Preston pointed out that East West Bancorp's operations in China and Hong Kong only account for a small portion of its total loans, making up approximately 4% to 5%. This suggests that any potential adverse impact from the company's presence in China may be limited.

The analyst's positive outlook on East West Bancorp is reflected in the ratings from other top analysts. According to data from WallStreetZen, 66.7% of top-rated analysts currently rate EWBC as a Strong Buy or Buy. Meanwhile, 33.3% view it as a Hold, and no analysts recommend or strongly recommend selling the stock.

Looking at the stock's performance, since East West Bancorp's last quarterly report on September 30, 2023, the stock price has seen a 7.4% increase. However, on a year-over-year basis, the stock is down 19.3%. During this period, East West Bancorp has trailed the S&P 500, which is down 13.6%.

As an analyst, Brody Preston has proven their expertise in the Financial Services sector. They are ranked in the top 14% out of 4,389 Wall Street analysts by WallStreetZen. Preston boasts an average return of 12.5% and a 57.1% win rate, demonstrating their ability to provide valuable insights.

East West Bancorp, Inc., the bank holding company for East West Bank, offers a range of personal and commercial banking services to businesses and individuals. The company operates through three segments: Consumer and Business Banking, Commercial Banking, and Other. It provides various deposit and loan products, wealth management, treasury management, foreign exchange, and online banking services. With approximately 120 locations in the United States and China, as well as full-service branches in Hong Kong, Shanghai, Shantou, and Shenzhen, East West Bancorp serves a diverse clientele.

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