Update (9:40 a.m.): Updated with Friday market open information.
NEW YORK (TheStreet) -- BMO Capital increased its target price on First Republic Bank (FRC) to $58 and set a "market perform" rating. The firm cited valuation with the benefit of 100 bp increase in interest rate.
The stock was rising 0.16% to $55.38 at 9:39 a.m. on Friday.
Separately, TheStreet Ratings team rates FIRST REPUBLIC BANK as a "buy" with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate FIRST REPUBLIC BANK (FRC) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, good cash flow from operations, solid stock price performance and increase in net income. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 11.8%. Since the same quarter one year prior, revenues slightly increased by 6.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The gross profit margin for FIRST REPUBLIC BANK is currently very high, coming in at 88.66%. Regardless of FRC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, FRC's net profit margin of 28.14% significantly outperformed against the industry.
- Net operating cash flow has significantly increased by 165.64% to $165.55 million when compared to the same quarter last year. Despite an increase in cash flow of 165.64%, FIRST REPUBLIC BANK is still growing at a significantly lower rate than the industry average of 430.57%.
- The net income growth from the same quarter one year ago has exceeded that of the Commercial Banks industry average, but is less than that of the S&P 500. The net income increased by 4.7% when compared to the same quarter one year prior, going from $110.11 million to $115.30 million.
- Compared to its closing price of one year ago, FRC's share price has jumped by 38.84%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- You can view the full analysis from the report here: FRC Ratings Report