BMO Capital analyst Etienne Ricard maintained a Hold rating on MCAN Mortgage (MKP – Research Report) on May 9 and set a price target of C$20.00.
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Etienne Ricard has given his Hold rating due to a combination of factors impacting MCAN Mortgage’s performance. Despite the challenging market conditions, the company’s core operations have shown resilience with stable net interest margins and targeted portfolio growth. However, the recent quarterly results fell short of expectations, primarily due to higher provisions for credit losses and lower income from MCAP, which is known for its volatility.
Additionally, while corporate spreads have stabilized, supported by hedging strategies and improved deposit costs, the impaired mortgage levels remain a concern, albeit slightly improved. The stock offers a sustainable dividend yield, slightly above its long-term average, which could attract yield-focused investors. Nonetheless, with the stock’s valuation normalizing and the dividend yield aligning with historical levels, the risk-reward profile appears balanced, justifying the Hold rating.