First Republic Shows How It Really May Be Different

One quarter doesn’t make a story, but First Republic’s (FRC) first quarter results certainly don’t hurt the argument that First Republic’s much higher than normal valuation is underpinned by a differentiated business model that can outperform in all seasons. Again, this is just one quarter and there are certainly plenty of risks in front of First Republic, but it’s hard not be impressed today.

When I last wrote about First Republic, one of my bullet points was that it was going to take a much weaker macro environment to push the shares to a “meaningfully cheap” level … and here we are. First Republic has already rebounded strongly from what may be the point of peak pessimism (the third week of March), but if low-to-mid teens long-term core earnings growth is still a valid assumption, these shares are undervalued now.

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First Republic Shows How It Really May Be Different