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Enthusiasm around the formation of a much larger First Citizens Bancshares quickly faded on Tuesday after the stock posted its biggest one-day gain ever.
First Citizens Bancshares Inc.’s
FCNCA,
stock fell back by 1% in premarket trades a day after it rallied nearly 54%.
D.A. Davidson on Tuesday hiked its price target by $200, to $1,025 a share, for the Raleigh, N.C.-based company and reiterated its neutral rating on the bank’s plan to buy the bulk of the former Silicon Valley Bank business in a deal brokered by the Federal Deposit Insurance Corp.
Also read: First Citizens’ stock notches largest one-day rally ever on deal for Silicon Valley Bridge Bank
D.A. Davidson analyst Kevin P. Fitzsimmons said the stock’s record runup on Monday as well as “looming environmental headwinds” are prompting him to maintain a neutral rating on First Citizens Bancshares.
He also hiked his 2023 earnings estimates by $17.91 a share to $110.43 a share. Total book value per share increases to $1,015.50 from $571.89, but he added that the figure contains “a fair amount of uncertainty in underlying purchase accounting assumptions.”
Thomas Smale, the CEO of mergers-and-acquisitions adviser FE International, said First Citizens will gain more of a national presence with the deal, but it will face competition now from larger players.
“Given the concentration of tech on the West Coast, the acquisition of SVB will give Citizens a bigger footprint which will be beneficial in the long run to maintain and win similar clients to SVB’s in the future,” Smale said in an email to MarketWatch. “This is arguably easier than growing organically, and longer term will help them compete with the larger banks which were originally rumored to be interested in an acquisition, such as JPMorgan.”
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