Global Courant
According to Atlantic Equities, First Citizens’ acquisition of Silicon Valley Bank will be fruitful for the bank’s stock. The company began coverage of First Citizens BancShares on Wednesday with an overweight rating and a price target of $1,775 per share. Atlantic Equities’ forecast implies an increase of nearly 50% from Tuesday’s closing price of $1,183.76. Share of FCNCA YTD mountain First Citizen is up more than 56% this year. Analyst John Heagerty highlighted the acquisition of Silicon Valley Bank as a potential catalyst for the stock’s growth, noting that the purchase “provides clear economies of scale and geographic diversification.” The company took over SVB’s assets earlier this year. “The acquisition of SVB has transformed FCNCA’s business, both in terms of strategic and financial benefits,” he noted. “With a combination of an attractive valuation, the high probability of a supportive buyback in 2024 and an undervalued business model, we are starting with an Overweight rating.” “More impressively, the $13 billion gain on the purchase results in a doubling of NII (Net Interest Income) and TBVPS (Tangible Book Value Per Share) and we calculate adj. EPS growth of 80-90% while maintaining CET1 (common equity tier 1) at 13.4% and Tier1 leverage at 9.5% in 2Q23E,” Heagerty said. Heagerty added that First Citizens could also benefit from better capital management and higher interest rates over a longer period of time, both factors that could lead to more than a 20% increase in Atlantic Equities’ full-year 2025 earnings outlook. Still, the acquisition would could be risky, Heagerty added, with potential downside headwinds including deposit outflows and increased exposure to the commercial real estate market. Shares of First Citizens BancShares have been on fire this year despite the regional banking crisis that hit in March, rising 56.1%. – CNBC’s Michael Bloom contributed to this report.
