Silvergate Capital upgraded to Equal Weight at Wells Fargo as downside plays out

Wells Fargo analyst Jared Shaw upgraded Silvergate Capital ( NYSE: SI ) to Equal Weight after the stock's downside scenario has played out, setting a floor for the shares of the cryptocurrency-adjacent bank. He pointed out that Silvergate ( SI ) isn't faced with the liquidity problems that FTX has, noting SI has ample cash, securities and if needed Federal Home Loan Bank borrowing capacity to fund deposit outflows. Still, Shaw set a "burndown" valuation of ~$25-$27 per share for the stock "in the unlikely event of liquidation," reflecting its $31 per share current tangible book value, adjusted for HTM marks, plus some value for the platform. Silvergate's ( SI ) average deposits are now $9.8B vs. $12B at Sept. 30, but "given the math of averages, current balances could be several billion lower than the $9.8B average," the analyst wrote in a note to clients. Silvergate ( SI ) stock slipped 0.6% in Monday premarket trading. Last week, the bank provided a mid-quarter update, disclosing average daily volume on its SEN network and the average deposits. On Oct. 26, the SA Quant system warned that Silvergate ( SI ) is at high risk of performing poorly. Shaw's Equal Weight rating is still more bearish than the average Wall Street rating of Buy and the average SA Author's rating of Strong Buy. SA contributor Nelson Alves says Silvergate ( SI ) will be battle-tested in the ongoing crypto bloodbath