SVB Financial (NASDAQ:SIVB) stock is gaining 1.6% in Monday premarket trading after Evercore ISI analyst John Pancari upgraded the stock to Outperform from In Line as the stock's recent pullback provides an entry point for long-term holders.
The stock dropped 11% in Thursday trading, even before the parent of Silicon Valley Bank posted softer-than expected Q2 earnings after the close. On Friday, SIVB shares slid 6.3% more.
"SVB Financial's (SIVB) 2Q22 results were clearly challenging and marked by a slowdown in loan growth, a decline in deposits, negative marks against warrants and investments, and loan loss reserve build," Pancari wrote a note Monday. As a result, earnings expectations were reset ~20% lower, he said.
"That said, while the revision is material and incremental risk persists (in our view), we continue to believe the stock warrants a premium multiple vs. peer banks also facing recessionary risks," he said.
He sees "substantial dry power" as a catalyst for the company's loan and deposit growth. "SVB management noted on its earnings call that private capital investment dollars remain substantial."
Pancari reduces his 2022 EPS estimate to $28.91 from $34.94 and 2023 EPS estimate to $37.20 from $46.96. Track SIVB's analyst earnings estimate revisions here.