Toronto-Dominion Bank T.TD

Bank of America

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BofA Securities analyst Ebrahim Poonawala sees Canadian bank stocks as cheap but uninspiring,

“Canadian banks are trading at 9.4 times 2024 estimated P/E vs 11.5 times pre-pandemic 5yr median and 1.3 times P/YE23 BV [year end 2023 estimated book value] vs. 13.8-per-cent 2025e ROE [2025 estimated return on equity] forecast. The risks from higher for longer interest rates and lack of drivers for sustained positive EPS revisions are likely to temper investor appetite to add exposure to the group … Dividend yields are near decade highs, but overnight risk-free rate at 5 per cent and a more tempered dividend growth outlook diminish appeal … We expect the next 12-18 months to remain challenging regardless of a recession. Acquisition driven synergies should provide a boost to RBC/BMO, although this is more likely to be 2H24 weighted. TD remains our sole Buy-rated name, however we acknowledge the lack of catalysts with management’s ability to deploy excess capital hampered by the US DOJ investigation. BNS needs expectations for rate-cuts to build or an efficiency plan to rejuvenate investor interest, strategic update at investor day (late Oct). We see limited EPS defensibility at CM if growth/credit backdrops worsen”