Zacks Investment Research downgraded shares of Washington Federal Inc. (WAFD) from OUTPERFORM to UNDERPERFORM on June 20, 2014, with a target price of $20.00.
We are downgrading our recommendation on Washington Federal to Underperform due to its mounting operating expenses. The company's fiscal second-quarter (ended Mar 31) 2014 earnings were in line with the Zacks Consensus Estimate. Rise in revenues and benefit from provisions were offset by higher expenses. Steady capital deployment activities, inorganic growth strategy and balance sheet restructuring initiatives are expected to benefit the company's financials in the long run. However, the company's deposit re-pricing effort will likely be challenged once the interest rates start rising. Also, significant exposure to risky loan portfolio makes us apprehensive.
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