Raymond James Downgrades First Republic Bank, Outlines Risks In 'Uncertain Environment'

Raymond James analyst David Long released a note on First Republic Bank FRC, downgrading his rating from a Strong Buy to Market Perform, but did not change his price target of $150 a share. The downgrade comes as investors fear that other regional banks will face withdrawal pressure following last week's collapse of Silicon Valley Bank SIVB.

Long outlines risks the bank could face if withdrawal requests exceed deposits, it could shrink the company’s EPS in an “uncertain environment.”

"We are not making any adjustments to our EPS forecast given the uncertain backdrop," the note said. “However, we recognize that near-term profitability carries less importance, and that our current estimates are at risk for a negative revision.”

Read Also: Why First Republic Bank Stock Is Down 60% Monday

The U.S. Treasury, the Federal Reserve and the FDIC announced a plan over the weekend to make sure all depositors of Silicon Valley Bank would be paid out in full.

Many thought this would help ease fears regarding other regional banks, but First Republic and peer Western Alliance Bancorporation WAL each traded down more than 60% Monday, as investors worry that depositors will rush to pull money out of the banks over fears the institutions may fail. 

Tim Melvin, a regional banking expert, joined Benzinga live on YouTube last Friday and said that banks like First Republic and Western Alliance should not face the same withdrawal pressures that Silicon Valley Bank did, and the stocks could be buying opportunities for the long term. 

Price Action: First Republic’s stock was trading down more than 60% Monday afternoon. Last Monday, shares of FRC were trading around $120 a share, and are down to around $34 a share this Monday, or a priced drop of more than 70% in one week. 

Now Read: Why Silicon Valley Bank Collapsed: A Simple Explainer