Morgan Stanley raised their stock price forecast on First Republic Bank to $180 from $175 and raised its earnings per share estimates to $7.33 on stronger deposit growth and faster security purchases.

In April, the bank’s first-quarter earnings came in at $1.79 per share, beating the Wall Street consensus estimates of $1.55 per share. The First Republic Bank posted revenues of $1.13 billion, up from $916.18 million seen in the same period a year ago.

“First Republic appears on track to continue its 20% annual loan growth and pristine credit quality for years to come. Raising our EPS estimates on stronger deposit growth and faster security purchases. We remain Equal-weight, however, given its lofty valuation multiple of 23.9x our 2022e EPS,” noted Ken Zerbe, equity analyst at Morgan Stanley.

“We are increasing our EPS estimates for First Republic by 1.9% in 2021 (from $7.19 to $7.33) and by 2.5% in 2022 (from $7.96 to $8.16). The main driver is stronger-than-expected other earning asset growth. Management noted that deposit growth remains quite strong in 2Q21, which could imply growth in excess of the $4.7 bil of loan growth that we expect in the quarter. For reference, core deposits were up $13 bil last quarter.”

First Republic Bank shares rose over 30% so far this year.

Fifteen analysts who offered stock ratings for First Republic Bank in the last three months forecast the average price in 12 months at $188.93 with a high forecast of $225.00 and a low forecast of $163.00.

The average price target represents a -2.94% from the last price of $194.65. Of those 15 equity analysts, six rated “Buy”, seven rated “Hold” while two rated “Sell”, according to Tipranks.

Morgan Stanley gave the bull-case scenario target price of $215 and the worst-case scenario forecast of $136.

“We expect mid-to-high teens loan growth at FRC, given its niche focus on high-net worth clients, and for it to deliver this strong growth while maintaining pristine credit quality, given its peer-leading through-the-cycle average NCO ratio of just one basis point,” Morgan Stanley’s Zerbe added.

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“Its wealth management growth paired with significant investments in digital offerings to target “next gen” clients for long-term growth, could result in a stable if not slightly increasing efficiency ratio, which pressures profitability. While FRC deserves to trade at a premium valuation, we believe the shares are fully valued and see limited upside. We would wait for a relative pullback before getting more positive on the shares.”

Other equity analysts also recently updated their stock outlook. Compass point raised the target price to $223 from $215. First Republic Bank had its target price boosted by JPMorgan Chase & Co. to $225 from $210. The brokerage currently has an overweight rating on the bank’s stock.

Jefferies Financial Group reiterated an underperform rating and set a $163 price objective. Maxim Group lifted their price objective to $210 from $200 and gave the stock a buy rating.

Check out FX Empire’s earnings calendar

This article was originally posted on FX Empire


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