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March 17, 2023 at 12:42 PM
First Republic Bank shares tumbled again on Friday, closing out their worst week ever, as sentiment around the lender remained fragile even after a $30 billion cash injection from Wall Street’s biggest banks.
Shares of First Republic sank 33% to finish at their lowest level since October 2011, brining losses for the week to a record 72%. The drop comes after the bank reported that its borrowings from the US Federal Reserve varied from $20 billion to $109 billion from March 10 to March 15, said it was suspending dividend payments and disclosed a dwindling cash position.
“We find it difficult to come up with a realistic scenario where there’s residual value for First Republic common equity holders,” Wedbush analyst David Chiaverini wrote in a note to clients. Chiaverini downgraded the stock to neutral, cutting his price target to $5 from $140.
Atlantic Equities John Heagerty also downgraded First Republic to neutral citing “unprecedented uncertainty” surrounding the California lender. He said a return to prior leverage ratios for the bank “may well necessitate a capital raise.”
The renewed selling pressure follows a volatile session on Thursday, when the stock plunged as much as 36% before ending the day with a 10% gain after the biggest banks on Wall Street, including JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc. and Wells Fargo & Co., pledged $30 billion of fresh cash for the lender.
