Scotiabank strategist Meny Grauman sees a buying opportunity “Canadian bank stocks have materially underperformed their U.S. peers over the past few months. A move that is not fully explained by fundamentals, creating what we view as an attractive buying opportunity. Over the past three months the gap in relative performance is 948 bps, with 624 bps coming over the past month as U.S. banks rallied strongly on the back of the most recent Fed announcement. From a valuation perspective the Canadian DSIBs are now trading at 10.7x 2022 consensus EPS versus 13.6x times for the large money-center U.S. banks, a discount of 21% ... Canadian banks delivered another strong quarter this summer (on average EPS was 11% better than consensus in Q3), that in many ways was more impressive than what the large US banks reported. Canadian results continue to be underpinned by a still booming mortgage market and a robust recovery in commercial loan growth even as US banks continue to see pressure on loan balances … The Rate Picture is Positive on Both Sides of the Border”
The analyst has “outperform” ratings on Bank of Montreal, Canadian Imperial Bank of Commerce, Canadian Western Bank, Royal Bank of Canada and National Bank of Canada .