Credit Suisse Comments On Canadian Banks

Credit Suisse commented on Canadian banks Thursday and upgraded Bank of Montreal (USA) BMO from Neutral to Outperform and raised its price target from C$90 to C$93.

National Bank of Canada NA was upgraded from Underperform to Neutral while Canadian Imperial Bank of Commerce (USA) CM was downgraded from Neutral to Underperform.

Analyst Kevin R. Choquette made the upgrades “due to the 10 percent share price retreat from 52-week highs which we believe is mainly on macro issues and perhaps short interest (Oil & Gas Exposure, Short Interest). We expect the resilient Canadian bank models to weather the potential economic slowdown and continue to generate a lot of capital and valuations are compelling.”

Choquette  added that in “a recent management meeting with BMO Capital Markets new President & CEO Darryl White, we got a renewed comfort level with the bank's U.S. Wholesale strategy. Darryl was very articulate about BMO Capital Markets strategy to be top 3 in Canada and extend capabilities in select International markets. The bank's U.S. strategy has resulted in it tripling its market shares in the U.S. market although from a very small base, but never the less significant momentum in a very large market.”

The upgrade NA was “based on significant share price underperformance and the decline in its relative P/E multiple back towards its historical mean. In addition NA has high exposure to Wealth Management and Wholesale which are our preferred business segments at this point given the macro environment.”

The downgrade to CIBC was “due to relatively strong share price performance, higher valuation, expected increased operating margin pressure in retail banking as revenue slows from the soft landing expected in housing. In addition CIBC has fewer avenues for growth with its very domestic focused business model.”

Bank of Montreal (USA) BMO recently traded at $67.61 down, 0.25 percent.  On the Toronto Stock Exchange, BMO recently traded at C$78.51, up 0.38 percent.

National Bank of Canada recently traded at C$45.73, down 3.01 percent.

Canadian Imperial Bank of Commerce (USA)  recently traded at $84.12, down 2.91 percent.