UPDATE: Bank Of America Reiterates On First Republic Bank As Near-Term EPS Power Is Cut Materially
In a report published Thursday, Bank of America analyst Erika Najarian reiterated a Buy rating on First Republic Bank (NYSE: FRC), but lowered the price target from $60.00 to $52.00.
In the report, Bank of America noted, “There's no getting around it: a higher regulatory cost burden as FRC approaches the $50bn asset threshold would materially dampen near-term EPS power. The biggest impact is clearly on the expense base. We expect operating expenses to average a quarterly run-rate of $269mn in 2H14 and $287mn in '15, vs. the $223mn 2Q14 run rate. These translate to an efficiency ratio of 61% in both 2H14 and 2015. Moreover, FRC appears to be slowing down balance sheet growth, decelerating its pace to reaching the $50bn threshold (now targeting 2H15 vs. 1H15), giving the bank time to ensure compliance with the more stringent regulatory requirements. As a result, our estimates come down materially: ‘14E goes to $2.55 from $2.95, ‘15E goes to $2.65 from $3.45, and ‘16E goes to $3.32 from $4.05.”
First Republic Bank closed on Wednesday at $46.70.
Latest Ratings for FRC
|Nov 2014||Sterne Agee||Initiates Coverage on||Underperform|
|Oct 2014||Keefe Bruyette & Woods||Maintains||Outperform|
|Sep 2014||Morgan Stanley||Maintains||Overweight|
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