Market Overview

Credit Suisse Upgrades Canadian Bank, Sees 'Perfect Storm' Buying Opportunity

Share:
  • Credit Suisse believes that the market has been too harsh on Canadian bank stocks.
  • Canada’s economy has much more to it that just oil.
  • The firm has upgraded National Bank of Canada (OTC: NTIOF) to Outperform and remains bullish on other names as well.

In a new report, Credit Suisse analyst Kevin Choquette explains why he believes now is a perfect time to be buying Canadian bank stocks. Choquette feels that the current pricing of the banks reflects an overly negative market view.

Balanced economy

According to the report, Canada’s economy is not just about oil and is more balanced that many people realize. Choquette points out that 76 percent of Canada’s exports go to the US, which is experiencing a strong economic expansion relative to many other global economies. Credit Suisse believes that the market is discounting Canadian bank share prices due to weakness in crude oil, but it is ignoring structural improvements in revenue and loan mix, balance sheet strength and profitability.

Related Link: Bank Investors: Here's What's Going To Be A 'Huge, Huge Market'

Value

Canadian bank share prices have fallen about 5 percent so far this year even though earnings have improved by 6 percent and dividends have climbed 8 percent. In addition, P/B ratios are the second lowest in 20 years. The only time they have been lower was during the Financial Crisis. Choquette adds that P/E ratios have still not recovered since the crisis, but Credit Suisse expects strong multiple expansion in coming years.

Upgrade

Credit Suisse believes that a confluence of factors has produced the perfect buying opportunity when it comes to Canadian Banks. The firm has reiterated its Outperform rating on Royal Bank of Canada (NYSE: RY) and Bank of Montreal (USA) (NYSE: BMO) and has upgraded National Bank of Canada to Outperform as well.

Disclosure: the author holds no position in the stocks mentioned.

Latest Ratings for RY

DateFirmActionFromTo
Dec 2019UpgradesNeutralOutperform
Dec 2019MaintainsNeutral
Nov 2019UpgradesNeutralOutperformer

View More Analyst Ratings for RY
View the Latest Analyst Ratings

Posted-In: Canada Credit Suisse Kevin ChoquetteAnalyst Color Upgrades Analyst Ratings

 

Related Articles (BMO + NTIOF)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
KHCUBSMaintains31.0
RPAYCantor FitzgeraldMaintains18.0
CMSCredit SuisseDowngrades
PBCTStephens & Co.Maintains15.5
TTECCowen & Co.Initiates Coverage On50.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com