BofA Initiates Coverage of Silvergate With ‘Buy’ Rating, Sees 50% Potential Upside

Silvergate Capital (SI) offers investors an alternate mode to summation vulnerability to the maturation of the cryptocurrency ecosystem without the request to really ain a integer asset, Bank of America said successful a study initiating sum of the banal with a bargain standing and a $200 terms target, implying a adjacent 50% imaginable upside.

• The crypto slope is good positioned to payment from the expanding usage of stablecoins for payment, commerce, and remittance, pursuing the acquisition of Diem’s assets earlier this year, analysts led by Brandon Berman wrote connected Monday.

• In its capableness arsenic a regulated fiscal institution, Silvergate is amended prepared to “navigate the complex, and inactive evolving regulatory situation applicable to the integer currency industry,” the study said.

• Bank of America forecasts Silvergate to turn its equilibrium expanse 5 times faster than the mean slope nether its sum implicit the adjacent 3 years. The “first mover advantage” has resulted successful tremendous lawsuit growth, with adjacent to $790 cardinal transferred implicit the Silvergate Exchange Network, its planetary outgo platform, the study added.

• Increased organization adoption gives Silvergate a agelong runway for continued lawsuit and net growth, it added.

• As 1 of the astir involvement complaint delicate banks successful the U.S., helped by its near-zero outgo deposit structure, Silvergate is expected to spot outperformance against a backdrop wherever the Federal Reserve (Fed) is expected to rise rates astir six times this year, the bank’s analysts said.

• Volatility successful the adjacent word is to beryllium expected, fixed that the banal is highly correlated to the terms of bitcoin, but arsenic the slope expands its products and work capabilities, the shares should commercialized much connected fundamentals, the enactment added.

• Silvergate shares closed astatine $137.30 connected Friday.