FBR Capital Raises price Target on First Republic Bank (FRC) Following 3Q Report
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FBR Capital reiterated a Market Perform rating on First Republic Bank (NYSE: FRC), and raised the price target to $80.00 (from $73.00), following the company's 3Q earnings report. FRC reported EPS of $1.00, beating the Street's estimate of $0.99. Total revenues increased 19.2% YOY and 4.3% QOQ primarily due to strong growth in net interest income and wealth management fees.
Analyst Paul Miller commented, "Yesterday morning, October 13, First Republic reported 3Q16 GAAP EPS of $1.00, beating our estimate of $0.96 and the Street estimate of $0.99. Worth noting, the EPS beat was largely a result of lower income tax expense than we expected. When applying a more "normalized" tax rate, which excludes the effects of exercised stock options and low income housing tax credit investments, we estimate operating EPS were $0.96, in line with our estimate but below the Street. Overall, we are impressed by First Republic's ability to continue growing the balance sheet at an accelerated pace all the while maintaining credit quality, and all things equal, we would become more positive on the stock if the company could control expenses while maintaining this level of growth. With that in mind, we model only a modest improvement in efficiency and ROATCE over the next 12 months and therefore view shares to be fairly valued at current levels. Following 3Q16 results, we maintain our FY16 operating EPS estimate and modestly increase our FY17 operating EPS estimate to $4.35 from $4.30. We are also increasing our price target to $80 from $73."
Shares of First Republic Bank closed at $73.99 yesterday.
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