The rating of Silvergate Capital (SI) was lowered to market perform from outperform by Michael Perito, an analyst at investment bank Keefe, Bruyette & Woods (KBW). Perito also lowered the price target to $16 from $25, citing limited visibility on the crypto bank’s outlook. Perito noted that with limited earnings and fundamental visibility over the past two months, a market perform rating is more reflective of the risk/reward profile for SI at this time. He believes there is a wide range of outcomes possible over the coming months.
Analyst Mike Perito of Keefe, Bruyette & Woods has downgraded the stock of Silvergate Capital Corporation (SI) from “Outperform” to “Market Perform” due to the recent volatility in the crypto industry following the bankruptcy of FTX. Perito still believes in the strength of Silvergate’s management, operating platform, and balance sheet, but finds it difficult to use fundamental valuation models for the stock in the next twelve months. He suggests investors to take a wait-and-see approach to the stock until the crypto industry stabilizes.
Silvergate Bank, a crypto-focused financial institution, has been hit hard by the crypto winter and the collapse of FTX in November. The stock has dropped nearly 90% year-over-year, while Bitcoin has fallen 46%. In January 2022, analyst Perito upgraded the stock to outperform with a $225 price target, but it currently has an average price target of $15 per share, with two buys, five holds, and one sell rating. Silvergate Bank is a prime example of the effects of the crypto winter, and investors should be cautious when considering investing in the stock.
