Goldman Sachs Starts Silvergate Capital Corp. (SI) at Neutral
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Goldman Sachs analyst Will Nance initiates coverage on Silvergate Capital Corp. (NYSE: SI) with a Neutral rating and a price target of $120.00.
The analyst comments "Silvergate is a bank holding company that operates a differentiated real time payments network (the Silvergate Exchange Network - SEN) serving members of the cryptocurrency industry, and has leveraged its major first mover advantage to build a large client list that drives significant network effects across its business. While SI has seen impressive organic client growth, the rapid increase in cryptocurrency prices over the past year has also led to a very large increase in cryptocurrency related deposits (+189% YoY in 4Q20) and led the stock to increase 366% YoY in 2020. We see considerable runway for SI to grow its business, increase the monetization of its platform, and grow the top line, where we expect 23% top-line CAGR through 2025. With the stock trading at 3x tangible book value, ~24x our 2023E EPS and ~13x our 2023E sales we believe the stock is already pricing in the attractive growth profile of its business, and thus, we are launching coverage with a Neutral. However, SI has solid exposure to more means of exchange types of activities and is one of the best plays on the expanding use of stablecoins for commerce, which could lead to significant amounts of capital-light fee income and significant growth in earnings over time if broader adoption of stablecoins comes to fruition."
Shares of Silvergate Capital Corp. closed at $96.36 yesterday.
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