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JPMorgan analysts reiterated an Overweight rating and the Top Pick designation on the embattled First Republic Bank (NYSE:FRC).
The analysts are growing increasingly more positive on FRC after the largest U.S. banks – Bank of America (NYSE:BAC), Citigroup (NYSE:C), JPMorgan (NYSE:JPM), and Wells Fargo (NYSE:WFC) among others – committed $30 billion in uninsured deposits to boost First Republic’s liquidity.
For the analysts, this was a historic move.
“We’ve covered the bank sector for over two decades and we have never seen the industry come together before to help secure a peer in need,” they wrote in a note.
“We suspect that with the banks providing the deposits having $16T of aggregate assets, that the amount being provided was determined to be enough to provide First Republic with sufficient additional runway.”
Back to the stock, JPM analysts see FRC stock trading “well below” TBV (tangible book value).
“We see this as a higher risk but potentially very high reward name. In fact, not only do we maintain our OW rating but given substantial upside potential to our revised price target, FRC remains our top pick,” they concluded.
The price target is cut to $62 per share (from $150), implying an upside potential of 80%.
FRC stock is down about 5% in pre-market Friday after adding 10% yesterday.
