Benchmarking companies and stocks against peers is a
time-tested strategy, but what do you do when a company doesn’t really
have many true peers? That’s one of the challenges with First Republic (FRC)
and its differentiated high-service model focused on providing banking
and wealth management services to high net-worth individuals and select
lending clients like equity investors, non-profits, and schools. While
“it’s different this time” are some of the most dangerous words in
investing, it is a relevant to First Republic at least insofar as this
model really is different.
These shares have modestly outperformed regional bank indices since my last write-up
(when I thought the shares offered a relatively rare entry point at a
reasonable price). I don’t think the shares are expensive now, per se,
but I do think the valuation is fair and I think First Republic faces
some increasing near-term headwinds that could dampen growth and raise a
few more pointed questions about how much of a premium the shares
really deserve.
Click here for more:
First Republic: Okay Quarter, But Valuation And Conditions Are More Demanding
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