First Republic Bank (FRC) continued its 🛝🛝🛝 on 17/3 (Fri) after the bank suspended its dividend & disclosed higher borrowing costs eating into its valuation, despite an unprecedented $30 billion deposit from 11 major 🇺🇸 banks🏦🏦🏦 Wedbush analyst was 🐻🐻🐻-ish while JPMorgan was 🐂🐂🐂-ish…
🔎🔎🔎 Wedbush Analysis：
FRC was downgraded by a Wedbush analyst, who put a $5 price🎯 on the stock after capital infusion😨😰🥵⁉️ Investors reacted to the analyst’s downgrade & sold-off again😓😓😓 FRC 🚀🚀 & closed at $34.27 on 16/3 (Thu) after 📰 of the $30 billion capital infusion but crashed💥💥💥 32.8% to close at $23.03 & 🛝🛝🛝 another 15.33% at post-market trading on 17/3🔥🥵🔥🥵🔥
⚠️ The analyst warned that a potential sale of the company “could result in minimal, if any, residual value to common equity holders & expects that FRC could end up with “significant negative tangible book value.”
⚠️ The analyst is taking First Republic’s “fair value marks on its loans and securities” into account when issuing this warning.
⚠️ The analyst lowered his rating from “outperform” to “neutral” & massively✂️✂️✂️ his price🎯 from $140 to $5😨😰🥵 despite acknowledging that FRC has an “exceptionally strong reputation and franchise value.”
🔎🔎🔎 JPMorgan Analysis：
On the other hand, JPMorgan analysts have reconfirmed their “Overweight” rating & “Top Pick” designation on FRC following the commitment of $30 billion in uninsured deposits. The analysts view this move as historic & have never seen the industry come together to help secure a peer in need before.
🐂 The analysts believe that the $30 billion in deposits provided by the large 🏦🏦🏦, which have $16 trillion of aggregate assets, will be enough to provide FRC with sufficient additional runway.
🐂 They see FRC as a higher risk but potentially very high reward name, trading "well below" TBV (tangible book value), & maintain their “Overweight” rating. They have revised their price🎯 from $160 to $62.
⚠️ JPMorgan Chase themselves are contributing $5 Billion🤔🤔🤔 Is this 🐂-ish review to safeguard their own monies-it is said that this kind of actions are not allowed & analysts are not supposed to be communicating with the investing arm but I’m highly suspicious.
⭐️ The current consensus among 24 polled investment analysts is to “Hold” with 2 “Sell”, 14 “Hold”, & 8 “Buy” ratings.
⭐️ The 21 analysts offering 12-month price forecasts for FRC have a median🎯 of $140, with a high🎯 of $185 & a low🎯 of $5.
🤔Is The 🏦 Crisis Over Yet❓How Should We Trade FRC❓
My quick answer is not yet & the next 1-2 weeks will give us confirmation on whether the 🏦 crisis is over & here’s why. Let’s analyse the a quickly executed poll by Reuters & Ipsos of 1,004 🇺🇸 consumers on 14-15 March which provides a bit of insight on how Americans are feeling about the chaos in the banking system, the government’s response, & if they feel their deposits are in danger.
(1) Only about half of the respondents to the poll said they’ve heard At Least a Fair Amount about Silicon Valley Bank's implosion😧 What will happen when all hear fully about it❓Wouldn’t it cause a 2nd-🌊🌊 of panicky depositors withdrawing 💰💵❓
(2) 68% said they had At Least a Fair Amount of confidence in the stability of their own bank, & the same % had at least that level of confidence in banks more generally, so that means 32% of Americans created the panic withdrawals😅 Any 👎📰 is likely to waver the 68% & chaos will set in again💥💥💥
(3) My take is that FRC is not for the faint-hearted❤️🩹❤️🩹❤️🩹 Only long FRC if you can accept the possibility of it dropping to $5😅Howver, if you don’t mind taking a big risk for the reward of the median🎯 price of $140, then FRC might be for you😉
$First Republic Bank(FRC)$ $SPDR S&P 500 ETF Trust(SPY)$
Fellow 🐯🐯🐯 Will you long FRC❓Vote🗳 & Share your thoughts with me in the comments section❣️Do follow me if you enjoy reading analytical stock research🔍 presented in a fun & easily understandable way & for more 🤖Stock Price Predictions🔮
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