Price Action on BNS! The price action we are seeing on Scotiabank is indicative that the market feels it is good value with a solid turnaround strategy! As I alluded to before, some analysts are typically slow too raise their targets! After the stock price goes up they raise their targets - sounds like a job any of us could do lol!
The other comment I would make is that in my view, they have been unfairly questioned for recently taking a "minority" ownership stake in a US Bank! Let us not forget that several Canadian banks have gotten in big trouble with complete takeover of US Banks. In my mind Scotiabank is using a novel and prudent approach! 1. This gives them future optionality to increase their ownership stake if all goes well 2, It provides excellent accretive near term earnings growth which represents optimal use of capital 3. It provides risk management by tipping your toe in the water to carefully assess the situation, and furthermore 4. It doesn't handcuff them from considering other growth opportunities!
Their strategy is somewhat different than the other Canadian banks that are highly leveraged in the US market. However, I like their approach: they maintain their strong international presence while demanding better results, and they slowly expand the North American corridor by deploying capital judiciously in the US market!
GLTA!