Street Calls of the Week
Investing.com - Scotiabank upgraded TMX Group (TSX:X) (OTC:TMXXF) from Sector Perform to Sector Outperform on Wednesday, while raising its price target to C$70.00 from C$65.00.
The Canadian financial services firm cited underestimated earnings momentum and growth potential as key factors behind the upgrade, along with expectations that TMX’s valuation will converge with its closest peer as it continues to execute its transformation strategy.
Scotiabank highlighted TMX’s attractive investment characteristics, including resilience through diverse revenue sources, solid growth prospects, strong cash flow, and high operating leverage, which position the company to perform well across various market conditions.
The firm noted that despite equities rallying strongly over much of the last six months and volatility receding, TMX offers an attractive combination of resilience and growth, emerging as what it calls a "solid quality compounder."
Following a strong run, TMX stock has retreated from recent highs and now trades at approximately a 10% discount to NASDAQ, which Scotiabank believes offers investors "a solid entry point with an attractive risk/reward profile."
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