Toronto-Dominion Bank TDBCP

TD - Morningstar Analyst Comments

[HoneyBadger77]

The TD shares sell off which is/was largely driven by the apparently unexpected asset cap on US assets is overdone in my view.  It's pretty clear that Morningstar was well aware of this on Oct 10th and stated so in his report.  Yet after the news broke, many investment institutions publicly stated (pretended) like they weren't expecting it obviously in an attempt to spoke retail investors and take TD's share price lower.  I don't see much more downside from here and with Technicals indicating a bottom is in, I'm expecting some decent upside very soon.  Expecting volatilty in the short term until retail wakes up and realizes the sell off is overdone.

In my opinion, DYODD.

HB77 

Analyst Note Michael Miller, CFA, Equity Analyst, 10 Oct 2024

Excerpts from Morningstar's Oct 10 Report on TD:

"The Wall Street Journal reported that wide-moat-rated Toronto-Dominion Bank will face around USD 3 billion, or about CAD 4.15 billion, in penalties for its failure to have proper anti-money-laundering practices in place in its US operations. As part of the settlement, regulators are also expected to place an asset cap on the firm’s US business. Despite the size of such a settlement, we do not expect to materially alter our CAD 88/USD 64 fair value estimate for Toronto-Dominion as the amount of the fine roughly matches what was already included in our projections. That said, we still see the shares as roughly fairly valued, despite the market’s negative response to the Oct. 10 news."


" An asset cap would have a longer-lasting effect, but the bank’s US operations were already facing some growth headwinds as credit deteriorates and its US deposits shrink, falling 4.8% year over year in the last quarter.  The bank’s Canadian personal and commercial banking generates substantially better returns then its US business, with a segment-adjusted return on equity of 34.1% versus 11.3% for US, limiting the effective impact of a cap on the firm’s overall results."

His fair value estimate for TD is $88.00.

[Ogopogo26]

... be greedy when others are fearful

[Ocalaman]

Unexpected ? That's all people have been talking about all year. 

[marcrobert]

LOTS OF NOISE MEDIA FEEDING FRENZY, HEADLINES WILL BE BAD FOR A WHILE... MOST FUND MANAGERS in Canadsa say BUY. Downside risk is limited but headlines will continue. Fund managers welcome the assets cap in the US, say TD has enough assets already, stop spending.  

[DeanEdmonton]

marcrobert - I agree. Maybe with this asset cap TD will focus on extracting better profits from its existing U.S. operations. Their ROE is running below 10%, even before this quarters big 3 billion provision, and the efficiency ratio is NOT spectacular in the States or even overall. I blieve they will get this turned around and we will see nice SP appreciation.

[marcrobert]

Buy side and sell side all expected the asset cap for a long time, many see this as a good thing... We have wells fargo as a recent example but TD will do better faster

[Warosar]

Obviously, anyone posting on this forum wants TD in their portfolio and viewed this as an opportunity.  Asset cap on, 5.5% divy and we are still trading at a fwd PE 9.X.   I was just jostling around price.  Well I was hoping it would break down to $72 but it didn't happen.  It started forming a base, so I jumped in.  TD will probably in a couple years go from