Bloomberg reported that First Republic Bank (NYSE:FRC) could be up for sale. Earlier on Wednesday, FRC’s credit rating was cut to junk by S&P Global and Fitch Ratings, citing deposit outflow risk.
While FRC’s stock remains on negative credit watch, both of these rating agencies could further downgrade the bank.
The collapse of SVB Financial Group, capital and liquidity concerns, and overall negative investor sentiment weighed on FRC stock. The stock of the private lender lost about 73% of its value in five trading days.
Nonetheless, FRC is focusing on strengthening its liquidity and capital position. It secured additional funding from the Federal Reserve and JPMorgan (NYSE:JPM), which boosted its liquidity.
It has a total liquidity of over $70 billion to fund its operations. Meanwhile, the bank is also eligible to receive additional funding under the Fed’s Bank Term Funding Program, created to support banks in meeting the needs of their depositors.
The FRC and the regulatory institutions have taken measures to reassure investors. However, investors’ negative sentiments aren’t likely to change quickly, which will put pressure on First Republic Bank.
Is First Republic Bank Stock a Buy or Sell?
The significant decline in First Republic Bank stock makes it attractive on the price front. However, ongoing challenges keep analysts cautiously optimistic.
First Republic Bank stock has received eight Buy, eight Hold, and one Sell recommendations for a Moderate Buy consensus rating. Moreover, as FRC stock has dipped quite a lot, analysts’ average price target of $144.14 implies 362.58% upside potential.
