Tuesday, November 07, 2006

UBS Analyst Forecasts Slowing Growth for Banks

  
The Globe and Mail, Allan Robinson, 7 November 2006

Jason Bilodeau, an analyst with UBS Securities Canada Inc., says the best days of growth for the Canadian banks are behind them for now and yesterday he cut the sector to a "neutral" with the exception of Toronto-Dominion Bank, which he maintained as a "buy."

The recent 15- to 20-per-cent runup in the share prices of the banks from their lows makes it unlikely the group will be able to make "outsized returns," he said.

He downgraded Bank of Nova Scotia, Canadian Imperial Bank of Commerce and Royal Bank of Canada to "neutral 1," "neutral 2" and "neutral 2," respectively, from their corresponding "buy" ratings.

The banks could see profit growth slow to 8.5 per cent in 2007 from about 11 per cent in 2006, he said.

TD Bank remains a "buy 2" with a 12-month share price target of $76. The shares closed yesterday at $66.86, up 8 cents. It has a superior growth profile and capital strength, while the shares trade at a discount, Mr. Bilodeau said.
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newratings.com, 6 November 2006

Analysts at UBS reiterate their "buy" rating on Manulife Financial, while reducing their estimates for the company. The 12-month target price has been raised from C$42 to C$43.

In a research note published on November 3, the analysts mention that the company has posted healthy results for the previous quarter, primarily driven by the robust performance across its US Insurance, US wealth and Asian operations. The analysts expect Manulife Financial to achieve mid-teens bottom-line growth going forward, despite the moderation in its sales growth, the analysts say. The operating EPS estimate for 2006 has been reduced from $2.50 to $2.49.
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Analysts' Target Price for Sun Life Financial
• BMO Capital Markets maintains "outperform," 12-month target price is $53.00
• Desjardins Securities maintains "hold," 12-month target price is increased to $48.50
• GMP Securities maintains "buy," 12-month target price is increased to $56.00
• RBC Capital Markets maintains "sector perform," 12-month target price is increased to $53.00
• Scotia Capital Markets maintains "sector perform," 12-month target price is $52.00
• TD Newcrest maintains "hold," 12-month target price is increased to $49.00
• UBS maintains "buy," 12-month target price is reduced from $57.00 to $55.00
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