SVB Financial Group (NASDAQ:SIVB) stock plunged about 65% more in Friday morning trading in the wake of growing concerns over its liquidity and overall financial health. The uncertainty has caused a slew of sell-side analysts to downgrade the already-beaten down stock.
On Thursday, SIVB cratered 60% after the lender repositioned its balance sheet and lowered guidance as client cash burn persists as rising interest rates hamper venture capital deployment.
Truist analyst Brandon King cut shares of venture capital-linked bank to Hold from Buy as the risk of accelerated deposit outflows increases, thus potentially boosting the odds of further securities sales (at a loss) in its held-to-maturity portfolio, he wrote in a recent note.
While King reckons SVB Financial (SIVB) “has enough balance sheet liquidity and access to other liquidity sources to operate as a going concern,” abrupt and outsized deposit outflows could limit it from tapping other liquidity sources to fund withdrawals.
Evercore ISI analyst John Pancari went as far as suspending coverage of SIVB, as he awaits more clarity on the company’s recently proposed $2.25B capital raise to fund realized losses incurred on its restructuring of its roughly $21B available-for-sale securities portfolio. Pancari had justified SIVB with an Outperform rating before suspending coverage.
Also, Raymond James analyst David Long downgraded the stock to Market Perform from Outperform, citing worsening cash burn expectations, a compressed outlook for net interest margin given prospects for higher-for-longer rates, and EPS dilution from the capital raise.
For a contrarian view, Seeking Alpha contributor JR Research thinks SIVB is a Buy on expectations for a potential mean-reversion opportunity, though he’s not ruling out that the bank could still ultimately fail.