National Bank Financial Sees Selective Outlook on Canadian Banks Amid High Valuations
National Bank Financial has updated its coverage on Canada's major banks, maintaining a positive but increasingly selective outlook as the sector approaches another earnings season. The analyst continues to rate Royal Bank of Canada (RY:CA) and Toronto-Dominion Bank (TD:CA) with an Outperform rating, with 12-month price targets of $318.00 and $190.00 respectively.
The bank's strong fundamentals remain broadly resilient, with strong capital-markets activity, wealth-management revenue, and relatively contained credit losses supporting earnings expectations. However, the sector's strong share-price performance has pushed valuations above historical averages.
National Bank Financial remains positive on all Canadian banks but its coverage update clearly identifies RBC and TD as its preferred opportunities, while maintaining a more neutral stance on BMO, BNS, and CM.