>>> US Research Calls

Research Calls

  • Upgrades:
    • CONMED (CNMD) upgraded to Overweight from Sector Weight at KeyBanc Capital Markets; tgt $124
    • Corning (GLW) upgraded to Buy from Hold at Deutsche Bank; tgt raised to $38
    • Equinix (EQIX) upgraded to Outperform from Market Perform at BMO Capital Markets; tgt raised to $785
    • KeyCorp (KEY) upgraded to Buy from Neutral at Citigroup; tgt $20
    • Marqeta (MQ) upgraded to Outperform from Peer Perform at Wolfe Research; tgt $5.50
    • M&T Bank (MTB) upgraded to Buy from Neutral at Citigroup; tgt lowered to $155
    • Orange (ORAN) upgraded to Overweight from Equal-Weight at Morgan Stanley
    • Pinterest (PINS) upgraded to Buy from Neutral at UBS; tgt raised to $35
    • Regeneron Pharma (REGN) upgraded to Outperform from Market Perform at SVB Securities; tgt raised to $976
    • Roku (ROKU) upgraded to Positive from Neutral at Susquehanna; tgt $75
    • Sanofi (SNY) upgraded to Overweight from Equal Weight at Barclays
    • Victory Capital (VCTR) upgraded to Overweight from Underweight at Piper Sandler; tgt raised to $35
    • Virtus Investment Partners (VRTS) upgraded to Overweight from Neutral at Piper Sandler; tgt raised to $260
  • Downgrades:
    • Caterpillar (CAT) downgraded to Underperform from Neutral at Robert W. Baird; tgt lowered to $185
    • Digital Realty Trust (DLR) downgraded to Market Perform from Outperform at BMO Capital Markets; tgt lowered to $100
    • DISH Network (DISH) downgraded to Neutral from Buy at UBS; tgt lowered to $10
    • Frontier Communications Parent (FYBR) downgraded to Underweight from Equal-Weight at Morgan Stanley; tgt lowered to $19
    • Leidos (LDOS) downgraded to Hold from Buy at Jefferies; tgt lowered to $95
    • Ollie's Bargain Outlet (OLLI) downgraded to Sell from Neutral at Citigroup; tgt lowered to $49
    • Remitly Global (RELY) downgraded to Peer Perform from Outperform at Wolfe Research
    • United Rentals (URI) downgraded to Underperform from Neutral at Robert W. Baird; tgt lowered to $300
    • Wingstop (WING) downgraded to Underperform from Hold at Jefferies; tgt $160
  • Others:
    • Cogent Biosciences (COGT) assumed with a Buy at H.C. Wainwright; tgt $28
    • Halozyme Therapeutics (HALO) resumed with a Buy at Berenberg; tgt $58
    • Model N (MODN) initiated with an Overweight at Morgan Stanley; tgt $43

>>> US Gapping down

Gapping down
In reaction to earnings/guidance:

  • BNTX -3.4%

Other news:

  • UBX -38.4% (results from phase 2 Envision study of UBX1325 in patients with wet age-related macular degeneration)
  • ICPT -0.5% (files mixed securities shelf offering)

Analyst comments:

  • FYBR -3.8% (downgraded to Underweight from Equal-Weight at Morgan Stanley)
  • OLLI -2.8% (downgraded to Sell from Neutral at Citigroup)
  • DISH -2.1% (downgraded to Neutral from Buy at UBS)
  • URI -1.4% (downgraded to Underperform from Neutral at Robert Baird)
  • CAT -1.2% (downgraded to Underperform from Neutral at Robert Baird)

>>> US Gapping up

Gapping up
In reaction to earnings/guidance:

  • BOC +1.8%

Other news:

  • FCNCA +28.7% (purchases Silicon Valley Bridge Bank (SIVB))
  • BLKB +20.2% (Clearlake Capital Group discloses bid to purchase all shares of BLKB for $71/share)
  • BGRY +18.9% (to be acquired by SoftBank Group in go-private transaction)
  • IOVA +9.9% (Completes Biologics License Application (BLA) Submission for Lifileucel in Advanced Melanoma)
  • NVS +6.5% (reports Kisqali Phase III NATALEE trial meets primary endpoint)
  • FSR +5.9% (achieves longest range of any battery electric SUV sold in Europe)
  • SGFY +5.7% (expects to complete its acquisition of Signify Health (SGFY) on or around March 29, 2023, subject to the satisfaction or waiver of the remaining customary closing conditions set forth in the merger agreement)
  • STKL +4.5% (upgrades To 'B' From 'B-' on improving business and strengthening financial measures; outlook stable)
  • HTGC +3.8% (establishes a new institutional private credit lending program)
  • DIN +3.7% (announces intention to refinance its class A-2-I senior secured notes through a securitization)
  • RPRX +3.7% (announces that the company's Board of Directors has authorized the repurchase of up to $1.0 bln of the company's Class A ordinary shares)
  • ARKO +2.1% (urges Travel Center of America's (TA) Board to consider superior acquisition proposal)
  • RIOT +1.9% (releases investor presentation which includes updates regarding Riot's financial position, business, and operations)
  • COP +1.5% (announces plans to become upstream operator and agreement to purchase additional shareholding interest in APLNG)
  • AZN +1.5% (reports demonstrated sustained benefit in Phase III trial)
  • RIVN +1.2% (moved additional engineers to its EV factory to accelerate output, according to WSJ)
  • WGO +1% (has reached a definitive agreement to acquire Lithionics Battery)

Analyst comments:

  • KEY +7.9% (upgraded to Buy from Neutral at Citigroup)
  • MTB +4.9% (upgraded to Buy from Neutral at Citigroup)
  • PINS +3.9% (upgraded to Buy from Neutral at UBS)
  • ORAN +2.7% (upgraded to Overweight from Equal-Weight at Morgan Stanley)

>>> US Early premarket gappers

Early premarket gappers

  • Gapping up:
    • FCNCA +22.6%, BGRY +18.9%, IOVA +8.3%, BBIO +8.3%, NVS +6.9%, STKL +4.5%, DIN +3.7%, HTGC +2.7%, AZN +1.8%, BOC +1.8%, RIOT +1.4%, BEP +1.3%, RIVN +1%, FSR +1%, COP +0.9%, INCY +0.7%
  • Gapping down:
    • EGLE -1.2%, VXX -0.6%, ICPT -0.5%

>>> Europe : Brokers Upgrades & Downgrades - 27th of March 2023 V2(+)

>>> Up
* HeidelbergCement Raised to Buy at Jefferies; PT 96.90 euros
* Orange Raised to Overweight at Morgan Stanley; PT 14 euros
* Plastic Omnium Raised to Neutral at JPMorgan; PT 17 euros
* Sanofi Raised to Overweight at Barclays; PT 115 euros
* SRV Group Raised to Accumulate at Inderes; PT 4 euros
* Talenom Raised to Accumulate at Inderes; PT 9 euros

>>> Down
* Cambi Cut to Hold at DNB Markets; PT 9 kroner
* Caterpillar Cut to Underperform at Baird; PT $185
* CRH Cut to Add at Numis; PT 51.70 euros
* Nemetschek Cut to Add at Baader Helvea; PT 71 euros
* Pernod Ricard Cut to Neutral at JPMorgan; PT 220 euros
* Roche Cut to Equal-Weight at Barclays; PT 270 Swiss francs
* Vonovia Cut to Underweight at Barclays; PT 18 euros

>>> Initiation
* European Real Estate Could Still Have 50% Downside, Citi Says (+)
* FinecoBank Rated New Overweight at Morgan Stanley
* Komplett Rated New Buy at Nordea; PT 22 kroner
* Lepermislibre Rated New Buy at TP ICAP Midcap; PT 4 euros (+)
* Siemens Energy Rated New Buy at HSBC; PT 24 euros
* VERBIO Vereinigte Rated New Buy at Deutsche Bank; PT 57 euros
* Vitrolife Rated New Hold at Handelsbanken
* XPS Pensions Rated New Buy at Numis; PT 205 pence

>>> Call
* HeidelbergCement Raised at Jefferies on Decarbonization Benefits
* Orange Raised to Overweight at MS on Free Cash Flow Outlook
* Plastic Omnium Raised at JPM on LVP Forecast, Lighting Outlook (+)
* JPMorgan Cautious on US Spirits Sector, Downgrades Pernod Ricard
* Vonovia Cut to Underweight at Barclays Citing ‘Too Much’ Debt (+)

>>> Stoxx 600 Pre-Market Indications

  • Deutsche Bank (DBK TH) +3.3%
    • Watch European Banks as US Says System Is Sound; Futures Rise
  • ING (INN1 TH) +2.6%
  • BNP Paribas (BNP TH) +2.6%
  • Novozymes (NZM2 TH) +2.6%
  • Bawag (0B2 TH) +2.6%
  • SocGen (SGE TH) +2.5%
  • Commerzbank (CBK TH) +2.5%
  • HeidelbergCement (HEI TH) +2.4%
    • HeidelbergCement Raised at Jefferies on Decarbonization Benefits
  • Stellantis (8TI TH) +2.3%
    • WC Sentinel: Ram previews Ford Ranger-sized electric ute – report
  • Siemens Energy (ENR TH) +2.2%
  • Vonovia (VNA TH) -0.3%
    • Vonovia Cut to Underweight at Barclays; PT 18 euros
  • Eurofins Scientific (ESF0 TH) -0.4%
  • TUI (TUI1 TH) -1.2%
    • Stock slumped as much as 10% on Friday after capital raise and closed 2% lower

>>> TradeGate Pre-Market Indications

DAX:
  • Deutsche Bank (DBK TH) +3.7%
    • Watch European Banks as US Says System Is Sound; Futures Rise
  • Commerzbank (CBK TH) +2.7%
  • HeidelbergCement (HEI TH) +2.5%
    • HeidelbergCement Raised at Jefferies on Decarbonization Benefits
  • Siemens Energy (ENR TH) +2.5%
    • Siemens Energy Rated New Buy at HSBC; PT 24 euros
  • VW (VOW3 TH) +1.5%
  • Vonovia (VNA TH) -0.1%
    • Vonovia Cut to Underweight at Barclays; PT 18 euros
MDAX:
  • Fraport (FRA TH) +2.2%
  • Evotec SE (EVT TH) +2.2%
  • Thyssenkrupp (TKA TH) +1.5%
  • Evonik (EVK TH) +1.5%
  • TeamViewer SE (TMV TH) +1.4%
SDAX:
  • VERBIO Vereinigte (VBK TH) +4.1%
    • VERBIO Vereinigte Rated New Buy at Deutsche Bank; PT 57 euros
  • Varta (VAR1 TH) +3.8%
  • Salzgitter (SZG TH) +2.3%
    • Salzgitter Sees 2023 Sales About EU13B, Est. EU10.09B
  • Traton (8TRA TH) +2.2%
  • Deutsche PBB (PBB TH) +2.1%
  • SAF-Holland SE (SFQ TH) -0.8%
  • Kloeckner (KCO TH) -0.9%

FT : First Citizens to buy failed Silicon Valley Bank

First Citizens to buy failed Silicon Valley Bank
Family-owned company’s acquisition of tech-focused lender’s deposits and loans follows sale of collapsed Signature Bank

First Citizens Bank will buy much of Silicon Valley Bank, US regulators said, as they estimated the lender’s collapse would lead to $20bn of losses for a deposit insurance fund paid for by banks.

The Raleigh, North Carolina-based lender will take on all $119bn of deposits at SVB, the once high-flying lender to tech start-ups and their investors that failed this month. First Citizens will also take over SVB’s loans and operate its 17 branches, the Federal Deposit Insurance Corporation said on Sunday evening.

First Citizens will buy about $72bn of SVB’s assets at a discount, leaving about $90bn of securities and other assets with the FDIC, which is acting as its receiver.

As it announced the deal, the FDIC said the failure of SVB could cost its Deposit Insurance Fund, paid for by member banks, about $20bn.

First Citizens, which calls itself the nation’s largest family-controlled bank, has been one of the biggest buyers of troubled banks in recent years.

Frank Holding Jr took over the job as chief executive of First Citizens, which was started by his grandfather in 1898, in 2008. He has since overseen nearly two dozen acquisitions in FDIC-assisted bank deals. Last year, First Citizens paid $2bn to acquire CIT, a lender to midsized corporations.

The addition of SVB’s business will significantly increase the size of First Citizens, which as of the end of last year had just over $100bn in assets and nearly $90bn in deposits, placing it as the US’s 36th largest bank, by assets. As of Friday, First Citizens bank had a market value of just over $8bn.

The deal follows a similar takeover announced a week ago for Signature Bank, the operations of which were sold to New York Community Bank-owned Flagstar.

As part of that deal, the FDIC was forced to retain $60bn worth of Signature’s loans. The federal agency has estimated that the failure and resolution of Signature bank could cost the FDIC’s insurance fund $2.5bn.

The plunge in SVB’s shares at the start of this month set off worries of brewing problems at regional lenders and the US financial system. On March 10, SVB was taken over by the FDIC after losses on its security portfolio and a failed equity raise spooked investors and depositors.

That kicked off an auction led by the FDIC for the failed lender. Along with a number of regional banks, private equity investors including Blackstone, Apollo, Carlyle, Sixth Street and HPS Investment Partners inspected SVB’s loans to consider possible offers, according to people with knowledge of the matter.

WSJ : First Citizens Acquires Much of Failed Silicon Valley Bank

First Citizens Acquires Much of Failed Silicon Valley Bank
Deal with federal regulators will make Raleigh-based firm one of the top 25 U.S. banks

First Citizens Bancshares Inc., FCNCB 1.85% one of the nation’s largest regional banks, is buying big pieces of Silicon Valley Bank more than two weeks after the lender’s collapse sent tremors through the banking system.

The Federal Deposit Insurance Corp. said First Citizens FCNCB 1.85% is acquiring all of Silicon Valley Bank’s deposits, loans and branches, which will open Monday morning under the new ownership.

The purchase includes $119 billion in deposits and about $72 billion of SVB’s loans at a discount of $16.5 billion. Some $90 billion of SVB’s securities will remain in receivership.

Regulators took control of Santa Clara, Calif.-based SVB on March 10. The collapse sparked a panic that led to the weekend failure of Signature Bank and a dramatic intervention by financial regulators aimed at easing fears that depositors would flee smaller lenders.

The sale represents a milestone in regulatory efforts to clean up after two of the largest bank failures in history, at a time when investors are on edge about the health of the global financial system.

First Citizens, based in Raleigh, N.C., was the 30th largest U.S. bank as of Dec. 31, 2022, with $109 billion in assets, according to the Federal Reserve. Monday’s deal would put the firm in the top 25 U.S. banks in terms of assets.

The FDIC agreed to share any of First Citizens’ losses or potential gains on SVB’s commercial loans. Overall, the FDIC estimated the failure of SVB will cost a federal insurance fund it oversees about $20 billion, or roughly 10% of the bank’s assets before its failure.

“We look forward to building relationships with our new customers and positioning our company for continued success as we affirm our commitment to support the integrity of our nation’s banking system,” First Citizens Chief Executive Frank Holding Jr. said in a news release.

The worries about American banks center on regional lenders that are perceived to be subject to the threat of deposit flight. Both SVB and Signature had large amounts of uninsured deposits—or customers with more than the standard insurance cap of $250,000 per depositor.

The KBW Nasdaq Bank Index of commercial lenders is down 23% this year, compared with a 2.7% decline for the Dow Jones Industrial Average.

First Republic Bank, a San Francisco lender that also has a large uninsured deposit base, has been in the crosshairs. Its shares have fallen 90% this year despite multiple efforts to bolster its health.

The firm has hired advisers to consider its options, but its bonds continue to trade at distressed levels. Investors will be watching First Republic and other banks closely when U.S. markets open Monday.

Officials both in the U.S. and in Europe have taken multiple steps to attempt to shore up confidence in the global financial system. The U.S. moved to back uninsured depositors of Signature and Silicon Valley following their failure, in a bid to ease the anxieties of similar depositors at other banks. The FDIC last week sold “substantially all” of the deposits and some of the loans of Signature Bank to a unit of New York Community Bancorp Inc.

Swiss officials a week ago engineered a takeover of troubled Credit Suisse Group AG by its rival, UBS Group AG , following a period of intense customer flight from Credit Suisse that raised concerns about the entire Swiss economy. Afterward, officials said they believed banks were safe and sound.

But signs that investors remain skittish are numerous.

On Friday, shares in giant German lender Deutsche Bank AG tumbled as much as 15% before closing 8.5% lower in Frankfurt, ending a day of declines for many of the largest European banks. The reason for the selloff wasn’t entirely clear, numerous investors said, given Deutsche Bank’s strong recent profitability and relatively low risk profile. Some said the declines reflected a mentality left over from the financial crisis.

At the same time, deposits continue to depart smaller U.S. banks following a surge in inflows during the Covid-19 pandemic. The outflows are going in part to the largest U.S. lenders, many of which are viewed as enjoying implicit government backing. The outflows also reflect, in part, the higher rates offered by money-market funds and short-term Treasury debt at a time when the Federal Reserve has sharply raised interest rates in a bid to quell high inflation.

Silicon Valley Bank failed because its core business of banking venture-capital firms and their startups was bleeding funds, creating a continuing cash need. But the firm had invested heavily in long-term bonds whose value was badly hurt by the Fed’s interest-rate increases over the past year, meaning it could sell them only at a loss.

When SVB tried to raise cash anyway, its depositors, largely business customers whose accounts were well above the standard $250,000 FDIC insurance limit, fled. Uninsured depositors across the system took notice and several other similarly-situated midsize banks such as Signature and First Republic, came under scrutiny.

SVB’s implosion marks the biggest test to date of the post-financial-crisis regulatory architecture designed to force banks to curtail risk and monitor it more closely. Officials have sought to reassure investors that the system remains strong.

“Fundamentally, the banking system is sound,” said Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, speaking on CBS’ “Face the Nation” on Sunday. “The banking system has a lot of capital to be able to withstand these pressures.”

Risks to SVB’s financial condition were apparent for months before its failure. The bank’s parent company disclosed that the market value of its held-to-maturity bonds was $15.9 billion less than their balance sheet value at the end of September 2022. That gap was slightly more than SVB’s $15.8 billion of total equity at the time, a measure of the bank’s net worth.

Regulators will likely spend months, if not years, getting to the bottom of what happened at SVB and why its banking supervisors didn’t move quickly or decisively enough to stop its problems from snowballing into a crisis.

The Fed, FDIC and Treasury Department appear to have limited the contagion by moving on March 12 to use emergency powers to guarantee uninsured deposits at SVB and Signature, while also setting up a new Fed lending program to allow banks to meet withdrawal requests.

Fed Chair Jay Powell has unveiled an internal Fed review of what went wrong, to be completed by May. Lawmakers plan to hold hearings beginning Tuesday.

Already, the Fed is rethinking a number of its own rules related to midsize banks in response to the tumult, potentially extending restrictions that currently only apply to the biggest Wall Street firms. A raft of tougher capital and liquidity requirements are under review, as well as steps to beef up annual “stress tests” that assess banks’ ability to weather a hypothetical recession, The Wall Street Journal reported earlier this month.

The rules could target firms with between $100 billion to $250 billion in assets, which at present escape some of the toughest requirements. There are about two dozen banks within the range.

The Fed was already reviewing a number of its regulations, led by Michael Barr, the central bank’s point person on banking supervision. But this month’s banking crisis has caused officials to re-evaluate parts of their review and to refocus their efforts on smaller institutions.