Barclays analyst Jason Goldberg initiated coverage of Silvergate Capital with an Overweight rating and $19 price target. Silvergate is the leading bank serving the emerging digital currency industry, Goldberg tells investors in a research note. While the company's near-term earnings power is hampered by the recent reduction in interest rates, over the longer term its low cost deposit base and monetization of captive client relationships should result in revenue growth far outpacing expenses, contends the analyst.
Goldman Sachs analyst Will Nance upgraded Silvergate Capital to Buy from Neutral with a price target of $166, down from $190, after the shares fell 25% on the back of a miss in Q4, with the market focused on the headline miss on net interest income. Silvergate shares now trade at the lowest levels of valuation since he initiated coverage, are approaching valuation metrics of more traditional, lower growth banks and are trading at a significant discount to "growthier banks," which he calls out as "a compelling opportunity to buy a growth oriented bank with attractive leverage to the growth in the crypto ecosystem."
B. Riley analyst Steve Moss reiterates a Buy rating on Silvergate Capital with a $260 price target. The company missed "bullish" Q4 expectations following a strong mid-quarter update, but the selloff in the shares is overdone as Silvergate reported several positive developments that bode well for the future, Moss tells investors in a research note. In particular, an increase in prospective digital currency customers and robust capital levels should facilitate the addition of new customers in 2022 to drive further deposit growth, says the analyst. He views the pullback as an "additional buying opportunity."
Canaccord analyst Joseph Vafi expects Silvergate Capital to see further drivers of earnings growth emerge, including NIM expansion coming from a higher interest rate environment. He also expect to see more opportunities emerge around stablecoin issuance, either in partnership with a leading service provider such as Meta or on a standalone "Switzerland" basis. Vafi reiterated his Buy rating and $164 price target on Silvergate Capital shares.
Reports Q4 NII $40.2M vs. $39.0M for 3Q21 and $22.4M for 4Q20. Did not record a provision for loan losses for 4Q21, 2Q21, or 4Q20 as a result of management's assessment of the level of the allowance for loan losses relative to the size and composition of the loan portfolio, among other factors. CEO Alan Lane commented, "2021 was another year of significant growth and momentum for Silvergate, driven by strong demand for our digital currency solutions powered by the SEN. Total deposits grew to $14.3B at the end of 2021 and our full year net income more than tripled compared to last year, reflecting growth in both fee income and net interest income. In the fourth quarter, we grew SEN utilization and transaction revenue, significantly grew SEN Leverage lines of credit and increased average deposits from digital currency customers to a record $13.3B. We also continued to build our stablecoin infrastructure capabilities, and announced the launch of the EJF Silvergate Venture Fund, an investment vehicle to support entrepreneurs who will help shape the future of the digital currency ecosystem. As we look forward to 2022 and beyond, I am excited about the opportunities and areas for growth that lie ahead as the digital currency industry continues to evolve."