National Bank of Canada shares get price target hike amid growth in all segments

On Thursday, BMO Capital Markets adjusted its outlook on National Bank of Canada (NA:CN) (OTC: OTC:NTIOF), raising the price target to C$125 from C$115, while reaffirming an Outperform rating on the shares. The bank's cash earnings per share (EPS) of C$2.68 surpassed the estimated figures of C$2.38 by BMO Capital and C$2.47 by consensus, driven primarily by robust trading results in Financial Markets and strong operating leverage in Personal and Commercial Banking.

The analyst noted that all segments of the bank outperformed expectations. Wealth Management's higher assets under management contributed to its success, while the U.S. Financial and Insurance segment benefited from strong performance by ABA and a C$10 million mark-to-market benefit at Credigy. Provisions for credit losses were in line with expectations at 25 basis points.

National Bank of Canada also reported strong capital levels, with a Common Equity Tier 1 (CET1) ratio of 13.5%, which positions the bank well for the anticipated acquisition of Canadian Western Bank (TSX:CWB). Additionally, the bank demonstrated a solid adjusted return on equity (ROE) of 17.0%.

The increase in the price target to C$125 is based on a higher target multiple of 12.0 times the forecasted fiscal year 2025 earnings per share. The analyst maintained the Outperform rating, signaling continued confidence in the bank's performance.

In other recent news, National Bank of Canada (NBC) posted robust third-quarter results, demonstrating a strong financial performance with a significant earnings per share (EPS) of $2.68 and a return on equity (ROE) of 17%.

hese results are attributed to the bank's diverse earnings mix and a solid credit profile. NBC is actively pursuing a growth strategy that includes increasing dividends for shareholders and the strategic acquisition of Canadian Western Bank to bolster its nationwide presence.

All business segments of NBC, including Personal & Commercial Banking, Wealth Management, Financial Markets, Credigy, and ABA Bank, have reported robust performances. Despite predictions of increased unemployment and slower growth, the bank's credit portfolio remains resilient with provisions for credit losses of $149 million and robust total allowances for credit losses exceeding $1.5 billion.

In terms of future expectations, NBC anticipates an increase in delinquencies and impaired provisions due to economic headwinds. However, the bank remains confident in its diversified earnings mix and solid credit profile, which have contributed to its strong performance. These recent developments underscore NBC's commitment to continued growth and financial stability.

InvestingPro Insights

InvestingPro data and insights provide a deeper look into the financial health and market performance of National Bank of Canada. With a market capitalization of $32.07 billion and a price-to-earnings (P/E) ratio that stands at 11.63, the bank shows a valuation that investors may find attractive compared to industry standards. The P/E ratio slightly adjusted for the last twelve months as of Q3 2024 is 12.08, reflecting a stable earnings outlook.

Moreover, National Bank of Canada has a track record of rewarding shareholders, having raised its dividend for 14 consecutive years, and has maintained dividend payments for an impressive 46 consecutive years. This consistency is mirrored in the bank's dividend yield of 3.4% as of the most recent data, with a dividend growth of 3.52% over the last twelve months leading up to Q3 2024. These InvestingPro Tips highlight the bank's commitment to shareholder returns, which may be particularly appealing to income-focused investors.

While the bank is currently trading near its 52-week high, with the price at 99.53% of this peak, analysts predict profitability for the year, and the bank has indeed been profitable over the last twelve months. This financial stability is further underscored by the bank's strong return on assets of 0.84% for the same period. For those seeking more detailed analysis and additional InvestingPro Tips, further insights are available, offering a comprehensive view of the bank's financial landscape.

For readers interested in exploring more about National Bank of Canada's market performance and future outlook, additional InvestingPro Tips are available, providing a total of 11 tips for potential investors to consider.

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