Janney analyst Timothy Coffey on Tuesday cut his rating on First Republic Bank FRC to sell from neutral, after the bank’s first-quarter results were “far worse than we expected.” Janney also cut the stock’s target price to $8 a share from $10 a share and reduced its forecast for First Republic’s second quarter results by 6 cents a share to a loss of 14 cents a share. “FRC’s results from 1Q23 were far worse than we expected, and we believe the company will have to complete a major pivot very soon to survive,” Janney analyst Coffey said. “We believe FRC needs to drop the growth-at-all-cost business model that defined the company and focus on profitability, which could be an epic undertaking.” The company may also need to raise capital in case it faces losses on the sale of assets, he said. “Drastic actions like selling off assets for losses is not ideal, but could save the franchise,” Coffey said. “The next iteration of FRC is unlikely to look like the previous version. It is likely to be a smaller, slower grower and, on an absolute basis, not as profitable. And, we anticipate some investors could opt to find other investments.”
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