Tuesday, January 26, 2021

Higher Expectations Make First Republic's Loan Growth Even More Important

Although First Republic (FRC) has reminded a standout performer in the banking sector over the last year, the share price appreciation slowed a bit relative to the broader regional bank space over the last three months as investors became more bullish on the sector's recovery prospects in 2021 and First Republic's growth was less of a standout opportunity.

First Republic's valuation has rarely ever stood out as a bargain, but that hasn't held back the share price appreciation as the bank has continued to post exceptional growth (double-digit CAGR for both loans and pre-provision profits over the past decade). I'm not in the "ignore the valuation and just buy" camp, but I do believe the odds favor First Republic once again beating its initial guidance for the year, and with this bank still poised to be a growth outperformer, I don't think the valuation premium is at immediate risk.


Read the full article here: 

Higher Expectations Make First Republic's Loan Growth Even More Important

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