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On Friday, National Bank Financial adjusted its stance on Canadian Imperial Bank of Commerce (CM:CN) (NYSE:CM), downgrading the stock from Outperform to Sector Perform, while simultaneously increasing the price target from Cdn$95.00 to Cdn$98.00. The revision followed the bank’s second-quarter financial report, which surpassed expectations, particularly due to its Capital Markets segment’s strong performance.
Canadian Imperial Bank of Commerce’s recent financial results were noteworthy for their robustness. The bank’s Capital Markets business was a significant contributor to its success. Additionally, its Canadian Personal and Commercial (P&C) banking segment demonstrated a remarkable pre-tax pre-provision (PTPP) growth of 12%, which stands out against the roughly 4% average among its peers.
The bank’s solid Common Equity Tier 1 (CET 1) ratio, a measure of bank solvency, has positioned it well for continued share repurchases in the coming quarters. This activity is expected to be a key factor in the bank’s strategy, given the general subdued organic growth levels observed across the industry.
Despite the positive aspects of the quarterly report and the raised price target, National Bank Financial expressed concerns about the future. The firm highlighted apprehensions regarding the domestic credit and growth outlooks. These factors are particularly pertinent to Canadian Imperial Bank of Commerce due to the nature of its business mix, prompting the downgrade in stock rating to Sector Perform.
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