TSX:EQB - Post Discussion
Post by
retiredcf on May 28, 2024 9:01am
RBC
Their upside scenario target is $118.00. GLTA
Outperform
TSX: EQB; CAD 83.81
Price Target CAD 107.00
Our View: We think Q2/24 is likely to show EQB continuing to execute on its growth strategy, although we expect PCLs to remain elevated, driven by the equipment finance segment, but decline in H2/24. We forecast EQB to sustain a mid-teen ROE and generate double-digit EPS growth over the next year. As a result, we view the shares as attractively valued and maintain our Outperform rating and $107 target.
Key points:
EQB reports Q2/24 results on Wednesday, May 29 after market close with the conference call scheduled for the next morning (Thursday) at 10am ET; dial-in: 1-888-390-0605 or (416) 764-8609 or webcast link on EQB website.
Our Q2/24 forecasts reflect: (1) normalized EPS of $2.63 (excl. derivative gains, losses on investments, and acquisition-related costs), below consensus of $2.69 (range of $2.51 to $2.87); (2) originations of $4.65B ($2.35B in Personal and $2.30B in Commercial); and (3) provisions for credit losses of $19MM (was $13MM), reflecting our aforementioned expectation that PCLs are likely to remain elevated in Q2/24, driven by challenges in the equipment finance segment.
We think investor focus for Q2/24 results include: (1) in credit, Q2/24 PCLs in aggregate, but in particular in the equipment leasing businesses. In terms of impairments, insight on how much Commercial impairments decline Q/Q given EQB’s commentary last quarter. In addition, commentary on PCL outlook remains a focus; (2) loan growth outlook and in particular Residential given housing activity, interest rates and being peak Spring housing season; (3) NIM yield trends in Q2/24 and outlook.
Maintaining our Outperform rating and $107 target.
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