UBS has moved Webster Financial (NYSE:WBS) from a Buy to a Neutral recommendation and lowered its price target to $75.00 from $77.00 in response to Santander's acquisition announcement. At the time UBS reported the change, Webster shares were trading at $72.26 and had climbed 10.12% over the prior week, according to InvestingPro data.
Santander disclosed on February 2 that it intends to purchase Webster Financial in a deal valued at $12.2 billion. The bank described the transaction as a move to bolster its footprint in the United States. UBS noted the arrangement implies roughly a 15% premium, an uplift that the firm contrasted favorably with recent transactions among mid-cap peers where investors criticized smaller premiums.
The takeover places Webster's valuation very near its market capitalization. UBS observed that the transaction values Webster at about $11.65 billion in market capitalization terms, and assigns a price-to-earnings multiple of 11 times next-twelve-months earnings. That multiple, UBS says, puts Webster roughly in line with industry peers and represents a level of valuation parity the company had not fully reached since announcing its merger with Sterling in 2021.
InvestingPro data show Webster trading near its 52-week high of $73.50 and at a P/E ratio of 12.25. UBS's assessment holds that the Santander bid may allow Webster to crystallize value in several areas that underpinned UBS's original investment thesis: the company's niche funding verticals, its commercial franchise, and profitability that outpaced peers.
Given that Webster stock was trading within approximately 4% of the deal value, UBS deemed a downgrade to Neutral appropriate, citing the reduced scope for additional share-price appreciation beyond the takeover consideration.
Earnings and transaction terms
Separately, Webster reported fourth-quarter 2025 earnings with diluted earnings per share of $1.59, topping the analyst consensus of $1.53. Revenue for the quarter came in at $746.2 million versus the expected $731.51 million. In a related corporate development, Webster entered into an agreement to be acquired by Banco Santander in a transaction cited as approximately $12.3 billion in value. The deal structure calls for 65% cash and 35% stock consideration, and Webster shareholders are to receive $75.00 per share.
Analyst reactions beyond UBS
The acquisition and Webster's reported quarter prompted several brokerages to update their ratings and targets. Stephens moved the stock from Overweight to Equal Weight while retaining a $73.00 price target. Jefferies downgraded its stance to Hold and lowered its price target to $75.00 from $80.00. RBC Capital shifted its rating from Outperform to Sector Perform but increased its price target to $75.00. Keefe, Bruyette & Woods raised its price target to $77.00, pointing to strong Q4 results and encouraging trends in loan growth and credit quality.
What this means for investors
UBS's change in recommendation reflects its view that the Santander transaction narrows the potential for further share appreciation, given the closeness of the market price to the deal consideration. The cluster of analyst adjustments that followed the announcement and quarterly results highlights how the acquisition has reshaped near-term valuation assumptions and broker expectations for Webster.
While the takeover offer and the company's recent outperformance drove a notable rally in the shares, UBS's downgrade signals a reassessment of risk-reward now that much of the deal value appears reflected in the market price.