On a Monday after high-profile bank failures on Friday and Sunday, it may seem an odd time to recommend buying shares of banks and other financial services companies, but Keefe, Bruyette and Woods have done just that, and Even says clients should buy shares of a bank whose stock was down more than 70% in premarket trading on Monday, after plunging 34% last week.
That stock is First Republic Bank FRC,
of San Francisco. KBW has a price target of $140 for FRC, which would represent a 71% upside from Friday’s close of $81.76.
Before going into the list of KBWs, it is a good thing to remind the readers that their annual letter For 1986 Berkshire Hathaway Inc. To shareholders, the company’s CEO, Warren Buffett, wrote that “we strive to be fearful when others are greedy and greedy when others are fearful.”
Silicon Valley Bank (main subsidiary of SVB Financial Group SIVB,
and Signature Bank of New York.
Last week, the KBW Nasdaq Bank Index BKX,
fell 16%, while the S&P 500 SPX,
declined by 4.5%. Those figures include reinvested dividends.
The liquidity problems caused by the failure of Silicon Valley Bank were driven by the bank’s focus on one industry: venture capital. But the fear spread to other regional banks, including two on KBW’s “buy” list, which the firm’s head of US Bank Research, Christopher McGarty, in a report on Monday called “unfairly punished as investors looked for SIVB read-throughs”. Did”. Those two include First Republic and Western Alliance Bancorp Wall,
of Phoenix. McGratty Apollo Global Management Inc. also labeled the APO “unfairly punished”.
An investment manager in New York.
The latest regulatory developments include an emergency lending facility set up by federal regulators to help banks avoid selling securities for a loss if they need to raise cash to cover deposit outflows. Regulators have also said that all depositors at Silicon Valley Bank and the failed Signature Bank of New York will have access to their money – even uninsured deposits. First Republic Bank FRC, -14.84% (listed below) announced it has received funding from the Federal Reserve and JPMorgan Chase & Co. JPM, +2.54%.
Here are the 11 financial stocks KBW recommended Monday morning, in the order they were listed in the firm’s report:
| Edge | anchor | City | Closing Price – March 10 | KBW Price Target | Projected 12-Month Upside Potential |
|
Western Alliance Bancorp |
wall, |
wonder |
$49.34 |
$85.00 |
72% |
|
First Republic Bank |
frc, |
san francisco |
$81.76 |
$140.00 |
71% |
|
US Bancorp |
usb, |
minneapolis |
$40.62 |
$58.00 |
43% |
|
Southstate Corporation |
s s b, |
Winter Haven, Fla. |
$75.72 |
$55.00 |
-27% |
|
Old National Bancorp |
onb, |
Evansville, Ind. |
$15.96 |
$22.00 |
38% |
|
Apollo Global Management Inc. |
apo, |
New York |
$60.29 |
$88.00 |
46% |
|
AGNC Investment Corporation |
AGNC, |
Bethesde, MD |
$9.97 |
$11.75 |
18% |
|
Search Financial Services |
dfs, |
Riverwoods, Ill. |
$102.14 |
$123.00 |
20% |
|
American International Group Inc. |
AIG, |
New York |
$53.15 |
$76.00 |
43% |
|
Reinsurance Group America Inc. |
rga, |
Chesterfield, Mo. |
$133.74 |
$201.00 |
50% |
|
axp, |
New York |
$165.70 |
$201.00 |
21% |
|
|
Source: KBW, FactSet |
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First Republic was one of a small group of banks whose interest margin contracted during the fourth quarter last year. At the same time, the weighted net interest margin for the US banking industry increased from 2.55% to 3.37% in the fourth quarter, according to the FDIC. Quarterly Banking Profile,
Among the companies on KBW’s recommended list, McGratty said US Bancorp USB,
Southstate Corporation SSB,
and Old National Bancorp ONB,
“Safe Haven Bank Stocks.”
He wrote that First Republic and Western Alliance Bancorp “offer more upside potential in the near-term given this weekend’s actions and last week’s significant selloff,” but also cautioned that these stocks “should remain solid for investors.” come with higher downside risks to “regain confidence in the banking system to deal with deposit/liquidity concerns.”
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