Analyst Mario Mendonca from TD Cowen maintained a Hold rating on Bank Of Montreal and increased the price target to C$184.00 from C$182.00.
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Mario Mendonca has given his Hold rating due to a combination of factors impacting the Bank of Montreal’s financial outlook. Despite the bank surpassing earnings expectations, the quality of these earnings was considered lower due to reliance on factors such as securities gains and reduced provisions for credit losses (PCLs). The bank’s exposure to the mass market has led to elevated impaired loan PCLs, particularly in unsecured consumer lending, which poses a risk to credit quality.
On the positive side, the bank has shown progress in improving its return on equity (ROE) through strategic measures like share repurchases and balance sheet optimization in the US. However, the ongoing pressure on unsecured consumer loans and the weaker-than-expected earnings quality have tempered the overall outlook. Consequently, while there are improvements in certain areas, the mixed impact of these factors supports a Hold rating for BMO’s stock.
According to TipRanks, Mendonca is a 5-star analyst with an average return of 17.4% and a 69.76% success rate. Mendonca covers the Financial sector, focusing on stocks such as Bank Of Montreal, Bank Of Nova Scotia, and Canadian Bank of Commerce.
In another report released on November 25, Jefferies also maintained a Hold rating on the stock with a C$181.00 price target.