BMO Upgrade The “stars are aligning” for Home Capital Group (HCG-T), said BMO analyst tienne Ricard in upgrading his rating for the stock to “outperform” from “market perform.
“Shares are in the early innings of an outperformance period with HCG striving towards high teens return on equity potential via the return of excess capital, in our view” Mr. Ricard said in a note to clients.
“2022 is set to be rich in financial performance improvements, underpinned by accelerating Alt-A mortgage growth, funding diversification and the return of excess capital becoming more tangible,” he added. “The net result is potential for rising return on equity could act as a lever for multiple expansion.”
Alt A mortgages are those with a risk profile falling between prime and subprime and are a focus for Home Capital.
He has a C$49 price target on Home Capital.