Balanced Risk and Reward: Ebrahim Poonawala’s Hold Rating on Bank of Montreal

Ebrahim Poonawala, an analyst from Bank of America Securities, reiterated the Hold rating on Bank Of Montreal. The associated price target is C$183.00.

Ebrahim Poonawala has given his Hold rating due to a combination of factors affecting the Bank of Montreal’s stock performance. Despite the bank reporting a higher-than-expected earnings per share (EPS) for the fourth quarter, the stock has underperformed compared to its peers. This underperformance occurred even though the bank benefited from strong capital markets activity and lower credit costs.
Management has maintained its medium-term objectives for EPS growth and return on equity, but the stock’s current valuation appears balanced when compared to its peers. Additionally, while there is potential for mergers and acquisitions in the U.S. banking sector, management has indicated that any such deals will not compromise their return on equity targets. Given these considerations, Poonawala sees the risk and reward as balanced, leading to the reiteration of a Hold rating.

In another report released today, Barclays also maintained a Hold rating on the stock with a C$181.00 price target.

BMO’s price has also changed moderately for the past six months – from C$148.120 to C$176.820, which is a 19.38% increase.