What happened
Things were looking up for banker to the Silicon Valley tech stars SVB Financial Group (SIVB.Q 20.00%) this week. Across that stretch, the veteran financier's stock rose by just under 7%, data compiled by S&P Global Market Intelligence reveal. At the end of the week, a major price-target increase from an analyst indicated growing confidence in its prospects.
So what
Friday morning before market open, Raymond James' David Long made a heavy lift to his SVB price target. Long added nearly $100 to his level; he's now pegged the stock as being worth $375 per share. Previously, he felt its fair value was $285. He maintained his outperform (i.e., buy) recommendation on the shares.
The motivation behind the price-target hike wasn't immediately obvious, but at the same time, it's not particularly surprising.
The Federal Reserve's latest benchmark interest-rate increase was the lightest in its recent series of upward adjustments. This easing should make borrowers more willing to go after loans, and the enterprises Silicon Valley Bank targets are always hungry for funds.
Now what
Meanwhile, SVB remains an important financial institution located in the global heart of the tech industry. For instance, its client list includes almost half of venture capital-supported tech and life science companies in this country. Lower -- or moderating, at least -- interest rates favor venture capital activities in addition to making loans more attractive for businesses in need of cash.
The indications early this year are encouraging for SVB. In mid-January the company published its fourth quarter of 2022 results. While net income was down by 36% sequentially and widely missed the average analyst estimate, the company notched encouraging growth in loans and posted net-interest income that came in above expectations.
