RBC Capital has adjusted its stance on Webster Financial (WBS), lowering the stock's rating from Outperform to Sector Perform even as it nudged the price target upward to $75 from $72. The move followed Webster's agreement to be acquired by Santander in a transaction priced at $75 per share.
RBC Capital analyst Jon G. Arfstrom conveyed the firm's updated view after the acquisition announcement. The market responded quickly - Webster shares were trading at $71.95 and had risen about 11.5% over the prior week as investors digested the deal terms.
The acquisition price values Webster at roughly $12.3 billion. Consideration for the transaction is structured as 65% cash and 35% stock, and the $75-per-share price represents about a 16% premium to the 10-day volume-weighted average price prior to the announcement. That share price sits modestly above Webster's 52-week high of $73.50, and data cited in the transaction note shows Webster's stock has climbed nearly 23% over the last 12 months.
RBC's analysis of the deal's valuation points to several metrics: the $75 price implies about 2x tangible book value, roughly 11.4x consensus 2026 estimated earnings per share, and about a 6.8x price-to-earnings ratio for 2028 after accounting for expected synergies. As a point of reference, current market figures show Webster trading at a P/E of 12.17 and a price-to-book ratio of 1.26, with analysts having noted the stock's relatively low P/E compared with near-term earnings growth expectations. The transaction is expected to close in the second half of 2026.
Leadership changes are part of the deal's framework. Webster's chief executive officer, John Ciulla, is slated to become CEO of Santander Bank NA, the U.S. banking entity into which Webster will be merged. Webster President and chief operating officer Luis Massiani is set to assume the role of COO of Santander Bank NA and Santander Holdings USA.
On a pro forma basis, the combined U.S. retail and commercial operations would make Santander a top-ten U.S. bank by scale. The combined U.S. balance sheet would include approximately $327 billion of assets, about $185 billion of loans, and roughly $172 billion of deposits. RBC's note points out that although the acquisition materially increases Santander's U.S. footprint, the deal represents about 4% of Santander's overall assets.
Separately, Webster released fourth-quarter 2025 financial results that exceeded analysts' forecasts. The bank reported fourth-quarter earnings per share of $1.59 versus an expected $1.53, and revenue of $746.2 million compared with an anticipated $731.51 million. Despite the upside to consensus estimates, the stock registered a slight dip in pre-market trading following the release.
Other broker commentary accompanied the earnings and deal activity. Keefe, Bruyette & Woods raised its price target for Webster to $77 from $75, citing strengthening loan growth momentum and improving credit quality as the rationale for the higher target. These analyst updates and the acquisition announcement together shaped recent shifts in valuation assessments and investor positioning.
RBC's downgrade to Sector Perform alongside a higher price target reflects the firm's recalibration of risk-reward once the transaction terms and pro forma scale became clear. Market participants will watch the regulatory and closing process ahead of the expected second-half-2026 completion date as well as the integration of leadership and strategic plans into Santander's U.S. franchise.
Key takeaways:
- RBC lowered Webster's rating to Sector Perform but raised its price target to $75 following the Santander acquisition announcement.
- The transaction values Webster at about $12.3 billion, is payable 65% in cash and 35% in stock, and prices the shares at $75 each - a roughly 16% premium to the prior 10-day VWAP.
- Webster's latest reported quarter beat EPS and revenue expectations; other analysts raised targets citing loan growth and improving credit quality.
What remains uncertain:
- Regulatory and closing timeline - the deal is expected to close in the second half of 2026, but completion remains subject to the usual approvals.
- Realization of projected synergies - valuation multiples cited include post-synergy assumptions, which will depend on successful integration.
- Market reaction to integration and leadership transitions - the CEO and COO roles planned for Santander Bank NA will be monitored as the businesses combine.