RE:Canaccord Raise TargetHere's his narrative. GLTA Pointing to an “improved stock market and general macro environment,” Canaccord Genuity analyst Scott Chan hiked his targets for Canada’s Big 6 banks on Monday, seeing signs of optimism from the recently completed earnings season for the sector south of the border.
“The six US mega banks (BAC, C, GS, JPM, MS, WFC) reported their Q2/23 results,” he said. “With lower expectations heading into the quarter (from US regional banking crisis and nearterm recessionary fears), we view overall results as incrementally positive (TD stock benefitted most with highest U.S. exposure). In Q2/23, US core P&C trends were mixed (i.e., larger NIM benefitting from higher rates but loan growth slowing, credit continues to normalize) with revenue and expense outlooks remain largely unchanged. The futures market is now pricing in less than two more rate hikes (or less than 50 bps) for the U.S. with anticipated rate cuts starting in Dec/23). We note that U.S. mega banks (avg.) trade at a slight P/E (2024E) premium at 10.0 times vs. the Big-6 Cdn. banks at 9.6 times. We believe both Group’s trade below their historical averages primarily due to macro concerns and potential impact on total PCLs during this extended credit cycle.”