Seeing merger and acquisition (M&A) news in the Canadian market is not something we usually see. Thus, that made Canadian bank National Bank of Canada (TSE:NA) a real surprise with its recent move to buy PGM Global Holdings. Investors were somewhat pleased with the notion, and sent National Bank shares up fractionally in Wednesday morning’s trading.
National Bank of Canada bought PGM Global Holdings, which owns PGM Global. PGM Global offers “institutional trading services,” which dovetails nicely into National Bank’s current offerings. Though no specifics of the deal were disclosed, National Bank did note that the deal would not “…have a material impact on its financial position.”
But PGM would, however, serve to nicely augment National Bank’s current line of services, particularly those offered through the National Bank Independent Network. The National Bank Independent Network offers wealth management services ranging from custody to trade execution and more. Since PGM is also dual-registered with the Canadian Investment Regulatory Organization and the Financial Industry Regulatory Authority in the United States, that would provide extra versatility and more options, valuable in uncertain investment times.
Sudden Hit from Analysts
Yet despite this, not all analysts were so convinced this was a good move. Jefferies, via analyst John Aiken, noted that consumer lending may have already softened, but that softening will likely be in place for a while. Moreover, business lending was likely to produce greater losses.
Moreover, the move to buy PGM may not even be all that helpful in the short term. Aiken and team noted that wealth management operations were still “buoyant,” but that advisory activity is in a decline. Aiken noted: “While the Canadian financials historically have been relatively resilient to downdrafts, near-term variables (domestic election and potential negotiations) provide little clarity. While some downside has been priced in, we caution that it is far from complete.”
Is National Bank of Canada a Buy?
Turning to Wall Street, analysts have a Hold consensus rating on TSE:NA stock based on two Buys, nine Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 9.28% rally in its share price over the past year, the average TSE:NA price target of C$133.07 per share implies 13.37% upside potential.
