The biggest bank failure since the global financial crisis has ravaged stocks, but Wall Street analysts see buying opportunities in some stocks affected by the collapse of the Silicon Valley bank.
The closures of Silicon Valley Bank, Signature Bank, and Silvergate Bank in the past week triggered a broader market downturn and raised concerns about the health of the overall financial system. But that hasn’t stopped analysts from making some bullish calls this week on weak financial stocks like
(ticker: SCHW) and companies that had money in the collapsed Silicon Valley bank, such as
on Monday reiterated its Buy rating on shares of Bill Holdings (BILL), which provides financial automation software for businesses. Analyst Andrew Schmidt lowered his price target on the stock to $108 from $131, citing selling pressure. Bill said on Saturday that it had about $670 million in the Silicon Valley bank, and said that its existing cash was sufficient to meet its working capital and other needs.
Schmidt said he sees the bill as a rare pure play on business-to-business commerce digitization, which should drive long-term opportunity. In addition, the bill would eventually recover all deposits, despite some transition costs, he said. Bills stock rose nearly 2% to $75 on Tuesday after jumping 8% on Monday. It had declined by 15% on Friday.
Roku is another company that had money in a Silicon Valley bank, with about 26% in cash and equivalents as of March 10, but said it has enough cash to meet various expenses and capital requirements.
Wedbush analyst Alicia Reese reiterated her outperformance on the streaming-media company on Monday. She highlighted its new features, such as updates to live TV and an exclusive in-store partnership with Best Buy for its new high-end Roku TVs. She wrote, “those features will drive enough user growth to save it in the near term”.
The stock rose 4% to $61.95 on Tuesday after falling about 1% during both Monday and Friday sessions.
Analysts say some financial stocks that have faltered broadly may also be worth a pick.
Citi analysts Christopher Allen and Alessandro Balbo raised their ratings on Charles Schwab stock from Hold to Buy, Baron’s Reported on Monday. The stock has declined 22% in the past two sessions through Monday’s close as investors considered the fallout from the failed banks. According to FactSet, the stock was trading at a 45% discount to its average historical price-to-earnings ratio on Monday.
Citi lowered its price target for Schwab stock to $75 from $83, which means a gain of about 32% from the current trading level of $57 on Tuesday morning.
Samruddhi Bankshare was one of the regional bank stocks which turned worst on Monday, However, D.A. Davidson analyst Peter Winter upgraded Texas Regional Bank shares to buy from hold on the same day, citing the bank’s strong balance sheet.
The stock rose 2% to $63 on Tuesday after falling 3% on Monday and 4.5% on Friday.
It was up 2% on Tuesday as data showed inflation continued to decline in February.
Write to Karishma Vanjani at [email protected]