BMOPOW-TSX Rating Market Perform Price: Nov-8 $42.48 Target ↑ $44.00 Total Rtn 8% Q3/21 Preview - Increasing Estimates & Target on Better Results at IGM/GWO Bottom Line: We are increasing Q3/21E operating EPS to $1.03 from $0.94 ($0.92 consensus) reflecting better-than-expected reported Q3/21 results from GWO and IGM, partially offset by weaker results at GBLB. 2022E operating EPS increased by 2% and our target price goes to $44 (from $43) largely reflecting increased estimates/target price at IGM post Q3/21 results. POW reports Q3/21 results on Wednesday, November 10 and will host a conference call on Thursday, November 11 at 8:30 a.m. ET; Tel: 1-833-979-2697 or 647-689-6826; Passcode 7390136#; webcast link. Key Points We are increasing Q3/21E operating EPS to $1.03 from $0.94 ($0.92 consensus), largely reflecting better-than-expected reported Q3/21 results from GWO and IGM, partially offset by weaker GBLB results. Q3/21 base EPS at GWO were $0.17 better than expected, driven by a number of unusual items in our view (EG: outsized experience gains and one-time upfront new business gain from a reinsurance agreement) (see our note). IGM’s Q3/21 results were better than expected on better fee revenues/rates, better opex/business development expenses, and better earnings from Strategic Investments (see our note). Earnings contribution from GBLB were slightly lower than expected, reflecting lower operating earnings. We look for commentary on surfacing value from non-public investments. POW has made meaningful progress in value-surfacing initiatives in alternative platforms (Sagard/Power Sustainable). In addition, investment in China AMC continues to contribute growing share of earnings to POW, and it is expected to remain the case going forward given the long-term structural dynamics associated with growing middle class and demand for wealth management. We also look for an update on management realizing value on standalone/non-core investments (e.g., Lion, GP Strategies, and LMPG) as well as capital deployment initiatives (as OSFI has lifted capital restrictions on Nov 4). We are increasing POW's 2022E operating EPS by 2% to $4.24, largely reflecting revised estimates at IGM post Q3/21 results. Out target price goes to $44 (from $43), largely reflecting increased target price at IGM. Our POW target price represents a 24% target discount to NAV. POW currently trades at 22% discount to NAV, vs. 29% long-term discount. Key Changes Target $44.00↑ $43.00 Estimates Q3 / 21E 2021E 2022E Operating EPS $1.03 $4.69 $4.24 Previous $0.94 $4.56 $4.15 NAVPS $54.29 $57.83 Previous $53.01 $56.91 Disc. to NAV 26.5% Previous 27.2%