Wednesday’s analyst upgrades and downgrades
TD Cowen analyst Mario Mendonca (TD Cowen) warns Canadian bank multiples could compress as operating leverage and revenue growth moderate, citing CMRR growth slowing and flat NIMs in 2028. He raised targets for BMO, CIBC, and RBC, and adjusted BNS and NB. Raymond James analyst Stephen Boland also updated Big 6 targets. Desjardins analyst Benoit Poirier said Cargojet shares rose after results.
How this was made
The 30-second read
Why it matters
It highlights a valuation-cycle thesis for Canadian banks (operating leverage and growth normalization) while still pointing to near-term earnings momentum and potential capital deployment/M&A upside. For Cargojet, it ties the post-earnings jump to execution and demand resilience despite an adjusted EPS miss.
Market read
Traders get updated price targets and a valuation framework for Canadian banks, plus a same-day earnings reaction catalyst for Cargojet.
What to watch
The article emphasizes CMRR and NIM normalization, but traders may also need to watch for actual Q3/26 commentary on capital deployment, provisioning releases, and any changes to restructuring or M&A timelines.
Background
The piece is a roundup of analyst actions ahead of Canadian banks’ upcoming Q3/26 earnings season, plus a separate analyst take on Cargojet’s recent results.
Ticker impact
Analyst Mario Mendonca raised Bank of Montreal’s target to $263 from $239, citing moderating operating leverage and EPS growth into 2028.
Near-term upside bias from the target raise, but multiple-compression risk could cap follow-through.
The article pairs a higher price target with a detailed valuation-cycle argument tied to CMRR and NIM normalization.
Bank of Nova Scotia’s target was cut to $124 from $113 (hold) as the analyst expects CMRR growth to moderate and pressure multiples.
Limited upside, with downside risk if investors reprice for slower operating leverage.
The text explicitly links the rating/target change to operating leverage normalization and plateauing growth.
Canadian Imperial Bank of Commerce target increased to $175 from $163 (buy) on expectations of benign credit and slower but stable growth.
Moderate upside bias versus peers if the market buys the “benign credit” narrative.
The article’s thesis supports EPS growth but warns multiples may not expand further.
National Bank of Canada target was raised to $227 from $202 (hold), while the analyst warns moderating operating leverage could compress bank multiples.
Choppy reaction risk, with upside limited by the multiple-compression thesis.
The article provides both a target increase and a macro valuation-cycle framework that can offset it.
Royal Bank of Canada target increased to $307 from $272 (buy) as the analyst expects fundamentals to remain strong into Q3/26.
Potential positive drift, but expect sensitivity to any evidence of slower CMRR or NIM.
The text explicitly ties the buy stance to strong fundamentals while still modeling growth normalization.
Raymond James raised Toronto-Dominion Bank’s target to $180 from $155 (outperform), citing expected sequential loan growth in the U.S. segment.
Higher probability of outperformance versus Canadian bank peers if the U.S. loan growth narrative gains traction.
The article includes concrete, company-specific drivers: sequential loan growth returning and AML remediation spending moderating.
Market effects
Canadian bank multiples may face a valuation-cycle headwind if operating leverage normalizes, even without credit deterioration.
Could shift relative performance within Canada’s Big 6 toward names with clearer U.S. catalysts and capital deployment narratives.
Limited direct global spillover, but the framework (NIM and recurring revenue normalization) is relevant to global bank valuation debates.
Counterpoint
If credit stays benign and fee-based earnings remain resilient, the “multiple compression” risk may be overstated and targets could still be revised higher.
Key entities
- companyBank of Montreal
Target raised to $263 from $239, with a thesis that operating leverage and CMRR growth will moderate into 2028.
- companyToronto-Dominion Bank
Target raised to $180 from $155 (outperform) on expected sequential U.S. loan growth and moderating AML remediation spending.
- companyCargojet Inc.
Shares jumped 8.6% after revenue beat and adjusted EPS of 67 cents, with execution and demand resilience cited by analysts.
