Piper Jaffray Says First Republic Bank's (FRC) Bite Sized Preferred Raise for Growth Should Not Surprise Investors - Remains Neutral

Piper Jaffray reiterated a Neutral rating on First Republic Bank (NYSE: FRC), and raised the price target to $64.00 (from $63.00), after the company announced that it had priced $150M of noncumulative perpetual preferred stock at a 5.50% coupon that is expected to close on February 10. Piper Jaffray says that this bite sized deal should not come as much of a surprise to investors.

Analyst Matthew Clark commented, Intraday, "First Republic priced $150M of noncumulative perpetual preferred stock at a 5.50% coupon to fund ongoing loan and securities growth. This is the fourth time in the last 12 months that FRC has raised capital for growth so this bite sized deal should not come as much of a surprise to investors. We trim our 2016 / 2017 EPS estimates to $3.65 / $4.24 (from $3.70 / $4.30) to incorporate the capital raise. We bump up our target to $64 (from $63) consistent with 15x our 2017E EPS (from 17x our 2016E as we roll forward the valuation). We see FRC shares fully priced here at 15.5x consensus 2017E EPS, a valuation that reflects above average growth prospects (mid-teens) and an opportunity to gain additional market share in wealth management."

For an analyst ratings summary and ratings history on First Republic Bank click here. For more ratings news on First Republic Bank click here.

Shares of First Republic Bank closed at $67.09 yesterday.

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