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Webster Financial Corporation

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Shares of Webster Financial have outperformed the industry, in the past year. Also, the company possesses an impressive earnings surprise history. It surpassed the Zacks Consensus Estimate for earnings in three of the trailing four quarters. Earnings estimates have been going upward ahead of the company’s fourth quarter results. Webster Financial’s continued growth in loans and deposits will aid profitability. Further, top-line strength and ample liquidity keep us encouraged. Also, the rising interest-rate environment and lower tax rates will support bottom-line growth. However, persistently rising cost base is a major concern, which might be further elevated by the company's efforts to strengthen the HSA Bank segment. High exposure in commercial and commercial real estate loans can be risky for the company if the housing sector weakens. Further, the company’s capital-deployment activities keep us apprehensive.

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