Shares of the cryptocurrency bank Silvergate Capital (SI 30.44%) traded nearly 2% higher as of 11 a.m. ET after the stock's price target got updated by Wall Street. The stock is up about 17% this week.
Analysts at Canaccord Genuity Group maintained their buy rating and upped their price target from $164 per share to $200 per share, which implies a roughly 45% upside from current levels.
The analyst upgrade comes after Silvergate Capital earlier this week reported strong earnings results for the first quarter of 2022. The bank reported roughly $25 million of profits in the quarter, or roughly $0.79 in earnings per share (EPS), on total revenue of about $60 million. Both EPS and revenue beat estimates for the quarter.
Silvergate runs a real-time payments system called the Silvergate Exchange Network (SEN), which better facilitates crypto trading between institutional investors and large crypto exchanges. In Q1, Silvergate added 122 new digital asset customers to the SEN.
Silvergate also saw nice growth in its SEN Leverage niche lending product, which is a line of credit in U.S. dollars collateralized by Bitcoin. SEN Leverage outstanding volume grew from $571 million at the end of 2021 to close to $1.1 billion at the end of the first quarter of this year.
I agree with the analyst upgrade here. Silvergate continued to grow its SEN network nicely and also benefited from a higher interest rate environment because it has lots of excess deposits it can deploy into higher-yielding bonds.
Silvergate also continues to work toward launching a U.S. dollar-backed stablecoin from SEN, which could be another big revenue driver. Ultimately, I was pleased with Silvergate's quarterly results and am excited about the future.