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Keefe, Bruyette & Woods Turns Sour On Canadian Banks, Downgrades Sector To Underweight

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In a report published Thursday, Keefe, Bruyette & Woods analyst Brian Klock moved his long-term recommendation for the Canadian banking sector to Underweight from Market Weight.

"We believe the outlook for muted Canadian economic growth in the first half of 2015 (which is through fiscal 3Q15 for the banks), when combined with the pressure from a lower yield curve, could weigh on top-line growth," Klock wrote. "Also, the impact from a weaker Energy sector could also reduce earnings growth for the banks this year."

Klock noted that the impact from a weaker Energy sector could also reduce earnings growth for the banks. The analyst also added that consensus estimates for the banks are too high and shares will be pressure during the year as the Street revises its estimates lower.


Rating Changes

Klock issued the following changes on TSX-listed Canadian banks:

  • Shares of Bank of Montreal (NYSE: BMO) were maintained at Market Perform with a price target lowered to C$80 from a previous C$86.
  • Shares of Bank of Nova Scotia (NYSE: BNS) were maintained at Market Perform with a price target lowered to C$67 from a previous C$71.
  • Shares of Toronto-Dominion Bank (NYSE: TD) were maintained at Market Perform with a price target lowered to C$56 from a previous C$58.
  • Shares of Canadian Imperial Bank of Commerce (NYSE: CM) were downgraded to Underperform from Market Perform with a price target lowered to C$92 from a previous $108.
  • Shares of Royal Bank of Canada (NYSE: RY) were downgraded to Underperform from Market Perform with a price target lowered to C$74 from a previous C$85.

Posted-In: Bank of Montreal Bank of Nova Scotia Brian Klock Canadian banks Canadian Imperial Bank of CommerceAnalyst Color Downgrades Analyst Ratings

 

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