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First Republic Bank T.FRC


Primary Symbol: FRCB Alternate Symbol(s):  FRCHL | FRCIL | FRCJL | FRCKL | FRCLL | FRCCL

First Republic Bank (the Bank) is a commercial bank and trust company. The Bank specializes in providing services, including private banking, private business banking, real estate lending and wealth management services, including trust and custody services, to clients in selected metropolitan areas in the United States. It operates through two segments: Commercial Banking and Wealth Management. The principal business activities of the Commercial Banking segment are gathering deposits, originating and servicing loans and investing in investment securities. The principal business activities of the Wealth Management segment include the investment management activities of First Republic Investment Management, Inc. (FRIM), which manages investments for individuals and institutions; money market mutual fund activities through third-party providers and the brokerage activities of First Republic Securities Company, LLC (FRSC) and its foreign exchange activities conducted on behalf of clients.


GREY:FRCB - Post by User

Post by retiredcfon Jan 07, 2014 8:52am
547 Views
Post# 22064737

RBC

RBCThis may have been what put the pop in our SP yesterday. Not only did RBC raise their target by almost 25%, their upside scenario target is a whopping $26.00!  In addition, FRC was also recently recommended by a Standard Life analyst named Capelle but I can't find the link. GLTA

January 6, 2014

Canyon Services Group Inc.

Upgrading to Outperform on Improving Canadian

Pumping Demand

Our view: Our upgrade is driven by FRC's position as a pure play

Canadian pumper and our expectation the Canadian pressure pumping

market supply/demand balance is tightening, driven primarily by rising

completion activity in the Montney/Duvernay plays. This should drive y/

y operating metric improvements and opens up the potential for pricing

power in 2H14. With strong FCF, dividend increases could also be potential

catalysts in 2014.

Key points:

2014 an inflection year for the Canadian pumping market: Well drilling

and licensing activity has begun to rise in the deep basin, a key pumping

intensive market in Canada as operators shift capital from less pumping

intensive oil plays (see page 3 for details). This is driving a tightening

of pumping supply in Western Canada and should drive improved y/y

operating metrics, potentially as early as Q4/13 results. With ~75% of

its revenues generated in the Montney and Duvernay plays currently,

we expect FRC to be among the primary beneficiaries of this improving

market.

Margin inflection as revenues rise, pricing a 2H14 story: In anticipation of

increasing activity, FRC has added employees and infrastructure in 2H13,

putting modest pressure on margins near term. This positions FRC for

margin expansion via its operating leverage as revenues rise. While we

expect Q4/13 and Q1/14 pumping activity to be up y/y, we do not expect

to see widespread pricing power. We view this as a 2H14 event, once

activity resumes post spring-breakup.

Growth and good FCF - A rare combination: Historically, OFS companies

have needed to fund growth via capacity additions, thereby generating

minimal FCF during these times. Given the surplus capacity for pressure

pumping, FRC should be able to post strong y/y growth while still providing

FCF (2014E $67MM, $1.06/share).

Dividend increases a potential catalyst: With a conservative $32.5MM

capital budget for 2014, we forecast FRC to generate ~$67MM in FCF

($1.06/share). As such, the potential exists for further dividend increases

as we move through 2014. FRC's current $0.60 per share dividend yields

~5% at current levels.

Potential upside to Q4/13 expectations: Our Q4/13 EBITDA estimate

of $19.7MM compares to consensus estimates at ~$17MM, providing a

potential catalyst for the stock.

Target price now $16. Our target price is now based on our 2015 estimates

and an EV/EBITDA multiple of 5.9x, at the low of end of the historical range

for its peers.
 

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