FTSE 100: Index falls as earnings results weigh; pound below $1.33, Bodycote soars
On Monday, Raymond (NSE:RYMD) James analyst Stephen Boland revised the price target on Laurentian Bank of Canada (LB:CN) (OTC: LRCDF) to C$27.00, down from the previous C$29.00, while maintaining a Market Perform rating on the stock. The adjustment follows the release of the bank’s first-quarter 2025 earnings, which reported an adjusted earnings per share (EPS) of $0.78. This figure fell short of the consensus estimate of $0.79 and Raymond James’ own forecast of $0.88.
The bank’s financial performance was hampered by higher expenses, which negated the benefits of an 8 basis point quarter-over-quarter improvement in net interest margin (NIM). These expenses are expected to further increase next quarter as Laurentian Bank continues to strive towards its long-term goal of achieving a return on equity (ROE) greater than 10%. Despite these efforts, the analyst noted that profitability in the near term is constrained by ongoing investments.
Management at Laurentian Bank expressed a commitment to their long-term strategy, despite acknowledging that the turnaround is anticipated to be a multi-year process. The firm pointed out that significant improvement in financial results would be necessary to justify the current level of spending, and a more positive stance on the bank’s stock would require clearer evidence of ROE improvement.
During the earnings call, tariffs were a topic of conversation, but the bank’s Northpoint inventory financing division is considered to be shielded from any potential tariff impacts. However, broader economic repercussions in Canada could introduce additional uncertainty for the bank’s Canadian operations. Despite these challenges, management highlighted the bank’s strong capital and liquidity position, substantial insured mortgage portfolio, and specialized commercial banking services as factors that would help navigate the current economic climate.
Raymond James concluded that they would wait for signs of operational improvement before adopting a more optimistic view on Laurentian Bank’s shares. The firm reiterated its Market Perform rating while lowering the price target to reflect the bank’s recent performance and the ongoing investment expenses that are impacting profitability.
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