Crypto bank Silvergate Capital lands Buy rating from Wells Fargo (NYSE:SI) – Seeking Alpha

Written by Amanda

Crypto bank Silvergate Capital lands Buy rating from Wells Fargo (NYSE:SI)  Seeking Alpha

Data analyzing in exchange stock market: the candle chars on display. Analytics price change cryptocurrency BTC to USD (Bitcoin / US Dollar), the most popular pair in the world. Big Bitcoin logo.

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Wells Fargo analyst Jared Shaw has started coverage on cryptocurrency lender Silvergate Capital (NYSE:SI) with an Overweight rating on the basis of rising interest rates, as well as prospects for further growth in its exchange network.

Shaw’s upbeat call comes despite crypto winter taking hold, exacerbated by crypto lending platform Celsius’ pause on all withdrawals due to “extreme market conditions.” More recently, crypto exchange Binance said it halted bitcoin (BTC-USD) withdrawals “due to a stuck transaction causing a backlog.” Shares of Silvergate (SI) -17% alongside a raft of crypto-focused stocks are cratering in Monday premarket trading.

Nevertheless, “as rates rise, higher spread income will come from a zero-cost deposit base, and further growth in SEN Leverage and the rollout of an SI-issued stablecoin payments network represent future opportunities,” Shaw wrote in a note.

The analyst pointed to Silvergate’s (SI) digital customer growth, its “biggest driver of deposits,” with its client base expanding at a Y/Y rate of ~35-40% since 2019, the note said. That “should drive much of the bank’s near-term profitability, as 77% of assets are securities (55% floating) and the loan book is also heavily floating-rate,” Shaw added.

Meanwhile, SA’s Quant Rating screens Silvergate (SI) as a Hold, with the poorest marks in momentum and valuation. By comparison, the Average Wall Street Analyst views the stock as a Strong Buy (6 Strong Buy, 3 Buy, 1 Hold).

Last week (June 9), Silvergate was assigned an Equalweight rating at Morgan Stanley.

Source: seekingalpha.com

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