(Bloomberg) -- Wall Street analysts covering First Republic Bank have turned the most bearish on the lender since its initial public offering more than a decade ago as a plunge in deposits led to a fresh wave of downgrades and sent shares sliding to a record low.
The stock sank by as much as 30% Tuesday after its earnings report further dented confidence in the San Francisco-based lender that had been shaken last month by the collapse of Silicon Valley Bank. Deposits plunged 41% in the quarter, prompting analysts from Citigroup Inc., Maxim Group LLC and Janney Montgomery Scott LLC to downgrade their ratings.
“With still a large level of uncertainty in outcomes and expected losses beyond the next year, we recommend investors sell shares as the outlook appears largely unclear,” Citigroup’s Arren Cyganovich wrote as he cut his rating on the stock to sell.
The Tuesday downgrades took the consensus analyst rating for First Republic to the lowest level on record for the stock, according to data compiled by Bloomberg.
The Monday evening earnings report added to the company’s woes as the bank said it would cut as much as 25% of its workforce and executives didn’t take questions on the earnings call.
Read more: First Republic Shares Plunge as Deposit Drop Renews Concern
First Republic’s plunge has made it stand out even among hard-hit regional bank stocks. The stock had already tumbled 87% this year through Monday’s close, making it the worst performer in the KBW Bank Index amid the regional bank tumult. Other US lenders followed First Republic lower, with the KBW Regional Banking Index underperforming the broader S&P 500 Index.
Janney Montgomery Scott analyst Timothy Coffey, who also downgraded First Republic to sell after its results, said the company is in need of a major pivot. He cut his target price to $8 from $10 previously.
The average target price for the bank, which sits at roughly $42, according to data compiled by Bloomberg, remains far above the stock’s current level of about $12, as some analysts haven’t updated their targets in months.
While Maxim’s Michael Diana also downgraded shares on Tuesday — lowering his rating to hold from buy — he’s less concerned about the bank’s long-term viability. “We do not believe that First Republic is going to fail, but it could be a long grind back to previous levels of profitability and growth, unless management can devise a shorter-term solution that is not accompanied by large dilution of common shareholders,” he wrote in a note to clients.
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