Some Wall Street analysts have retreated from recommending the stock after the recent sell-off in regional bank stocks, even though they still believe in the company’s underlying fundamentals. PacWest Bancorp fell 50% on Thursday after reports said it was considering a potential sale, but First Republic Bank had been seeking additional financing for weeks before it was seized by regulators. This is a concern for investors. Other regional banks were also sold, with Western Alliance Bank down 19%. Pacwest confirmed in a press release that it was considering strategic options, but said it had “not experienced any unusual deposit flows” since the sale of First Republic, with core deposits actually increasing since the end of the quarter. He added that he does. The deposit update wasn’t enough to reassure Wall Street analysts about the health of local banks, and there are fears that the decline in stock prices could rekindle deposit flight. “We believe that WAL and the broader group of regional banks are in a negative feedback loop as stock prices plummet, fueling fears of declining deposits,” Bank of America’s Ebrahim Poonawala said in a memo to clients. rice field. DA Davidson analyst Gary Tenner downgraded PacWest for similar reasons. “Given market concerns, we do not see PACW trading on fundamentals and have decided to sit on the sidelines with a neutral rating and $3 PT,” Tenner said in a memo to his clients. said. PACW 5D Mountain PacWest’s stock price plummeted this week. RBC Capital Markets analyst John Arfstrom, meanwhile, maintained PacWest’s Outperform rating, but said only investors with big stomachs would hold out. “The risk and volatility tolerance must be very high to be in this stock, but our feeling is that earnings reporting trends and the strategic decisions being made at the company have changed little. ‘ said Alfstrom. Note to client. But Johnny’s Christopher Malinak reiterated his own buy rating on the stock, saying news about a possible strategic move for PacWest was “outdated.” Western Alliance Bank Another bank stock that has suffered heavy losses in recent weeks is Western Alliance Bank. In a press release Wednesday, the bank said it had not seen “unusual deposit flows” since the sale of First Republic. The bank added that deposits have increased by $1.2 billion since the end of March. WAL YTD Mountain Shares are down more than 60% year-to-date. UBS analyst Brody Preston said in a note to clients that the update “highlights how the fundamentals of the balance sheet have been completely decoupled from the stock-related volatility around the FRC resolution.” rice field. Preston affirmed his buy rating on the stock. In a note to clients on Thursday, Johnny analyst Timothy Coffey said the bank was “corrupted by associations” and echoed his buy rating on the stock. Jeffries and Piper Sandler also maintained their positive ratings for the stock. Meanwhile, Bank of America’s Punawarra has changed his policy to not rate the stock. “Market concerns that WAL is no longer trading on fundamentals, but could face further funding stress and further pressure on profitability,” Poonawala said. I think there is,” he said. — CNBC’s Michael Bloom contributed coverage.
