Daily Update - March 13, 2023

Selected highlights of the day

By: Matthew Otto

First Republic Bank

Is working to reassure clients about the safety of its business following the collapse of Silicon Valley Bank, which raised concerns of contagion in the banking industry. Despite this, FRC’s stock plummeted over 60% in pre-market trading. However, the Federal Reserve unveiled a new Bank Term Funding Program (BTFP) that enabled better liquidity management for banks, and FRC obtained additional liquidity from JPMorgan Chase and the Fed, which the bank used to diversify and enhance its financial position. On Monday, regional banks such as PacWest Bancorp and Western Alliance Bancorp were the worst hit, and European banks followed suit. Though FRC does not cater to the start-up and venture capital industry as much as Silicon Valley Bank did, investors are concerned about its concentrated deposit base. The bank has a “continued strength” of capital, liquidity, and operations, as per First Republic executives’ statement.

  • Raymond James’ David Long lowered First Republic Bank’s rating from Strong Buy to Market Perform.
  • Wolfe Research’s Bill Carcache downgraded the bank’s rating from Outperform to Peer Perform.
  • Steven Alexopoulos kept his Overweight rating.
  • No price target changes were provided for either of the recommendations.
  • David Chiaverini, an analyst at Wedbush, maintains his Neutral rating on Western Alliance and keeps the price target at $80.

PNC Financial Group

Has decided not to bid on Silicon Valley Bank’s assets after initial discussions with the Federal Deposit Insurance Corp. (FDIC), according to an anonymous source. PNC had sent an initial notice of interest to the FDIC regarding a potential deal, but ultimately decided not to move forward after conducting initial due diligence. A PNC representative confirmed that the bank is not currently in talks to acquire SVB Financial or Silicon Valley Bank.

  • Keith Horowitz, a Citigroup analyst, has upgraded PNC Financial Services Group from a Neutral rating to Buy and has set a price target of $175.

The unexpected closure of Signature Bank

Has further contributed to the ongoing financial issues affecting the cryptocurrency sector.

  • JMP Securities analyst Devin Ryan reiterates a Market Outperform rating for Coinbase Global and maintains a price target of $90. Oppenheimer analyst Owen Lau also maintains an Outperform rating but lowers the price target from $84 to $70 quoting on Barrons for significant impact on the digital assets and Silicon Valley ecosystems

Pfizer buys Seagen

Pfizer announced that it has agreed to acquire cancer-focused biotech company Seagen in a cash deal valued at $43 billion. Under the deal, Pfizer will pay $229 per share in cash for Seagen, which values the biotech firm at $43 billion. Pfizer’s acquisition of Seagen is based on the prediction that the latter company will hit $10 billion in revenue in 2030, which is seen as an optimistic expectation by some observers. However, if Seagen does achieve this target, it will help Pfizer to reach its goal of $25 billion in 2030 revenue from new business development.

  • Currently there are no new analysts stock recommendations following the news.

SNY

French pharmaceutical company Sanofi has agreed to acquire biopharmaceutical company Provention Bio for $25 per share, valuing the autoimmune disease-focused firm at $2.9bn. The deal, which will see Sanofi obtain Provention’s therapy TZIELD, approved last year for delaying the onset of Stage 3 type 1 diabetes, is set to be the largest acquisition for Sanofi since the purchase of Principia Biopharma for over $3bn in 2020. The acquisition is aimed at bolstering Sanofi’s therapies in type 1 diabetes.

  • Geulah Livshits, an analyst at Chardan Capital, reiterates a Buy rating on Provention Bio while reducing the price target from $30 to $25.

WOOF

Citigroup analyst Steven Zaccone has downgraded Petco Health and Wellness from Buy to Neutral and has set a price target of $11. The downgrade was reported on CNBC due to concerns about continued weakness in discretionary spending and the potential for consumers to choose cheaper offerings, among other factors.

Cellectis

Has announced its fourth-quarter and full-year financial results for 2022. The company entered into a €40 million credit facility with the European Investment Bank and closed an equity offering of approximately $25 million to support its research, development, and innovation activities. It presented positive preliminary clinical data from its Phase 1 BALLI-01 study, which evaluated UCART22 for patients with r/r B-cell ALL and received encouraging preliminary results from the Phase 1 AMELI-01 study for patients with AML.

The “BALLI-01 study” is a clinical trial that evaluated the safety and efficacy of UCART22, a CAR T-cell product candidate, for patients with relapsed or refractory B-cell acute lymphoblastic leukemia (r/r B-cell ALL).  The “AMELI-01 study” is another Phase 1 clinical trial that evaluated UCART123, a CAR T-cell product candidate, for patients with relapsed or refractory acute myeloid leukemia (r/r AML).

  • JMP Securities analyst Silvan Tuerkcan has maintained a Market Outperform rating on Cellectis and a price target of $6.
  • Oppenheimer analyst Hartaj Singh has maintained an Outperform rating on the stock but lowered the price target from $16 to $13.

Diversey Holdings

Has announced last week that it will be acquired by Solenis, a manufacturer of specialty chemicals, in an all-cash transaction worth approximately $4.6 billion.

Over the weekend, Moore Kuehn, a law firm based in New York, is investigating potential claims regarding the fairness of the proposed mergers looking into whether the boards of these companies acted in the best interests of shareholders, whether material information was properly disclosed.

  • Mizuho’s Christopher Parkinson raised the price target from $6 to $8.4.
  • Credit Suisse’s John Roberts lowered the price target from $9 to $8.4 and downgraded the stock from Outperform to Neutral.

Genius Sports

Has reported that it exceeded its group revenue outlook in 2022. The company generated $341 million in group revenue and $16 million in group, surpassing its guidance of $340 million and $15 million, respectively. The company also achieved a 41% year-on-year growth in constant currency, and its US revenue more than doubled, driven by market liberalization, in-play gross gaming revenue (GGR) growth, and expanded customer relationships. For 2023, the company reaffirmed its expectations for over 150% adjusted EBITDA growth, with a revenue outlook of $391 million and a group adjusted EBITDA outlook of $41 million, consistent with current consensus estimates and reflective of today’s foreign exchange rates. The company also expects to generate positive free cash flow in the second half of 2023.

  1. Benjamin Chaiken, an analyst at Credit Suisse, continues to rate Genius Sports as Outperform but has reduced the price target from $10 to $8.
  2. Bernie McTernan, an analyst at Needham, reiterates the Buy rating and maintains a price target of $7.

TSLA

  • Wolfe Research analyst Rod Lache lowered Tesla from Outperform to Peer Perform due to concerns about macro challenges. Although he finds Tesla’s cost trajectory is impressive, which is expected to lead to significant growth over time, there are still concerns about external factors.

GOOGL

Bank of America analyst Justin Post has maintained his buy rating on Alphabet, citing the company’s strong data and technology advantages in the area of artificial intelligence (AI). The investment bank believes that Google’s stable search metrics and upcoming product releases based on large language models (LLMs) could help alleviate any negative sentiment surrounding the stock. Despite concerns about an overhang in the stock, Post remains optimistic about Alphabet’s prospects in the AI space.