Bank of Montreal (BMO:CA) (BMO)
Bank of Montreal (BMO:CA): TD Cowen raised its 12-month target to C$170 from C$164, citing several fundamental improvements: notably, a rebound in capital markets revenue, clearer credit outlook, enhanced U.S. business exposure, and shareholder return enhancements through share buybacks and balance sheet optimization.
Basis For the Upgrade
Capital Markets Strength: BMO’s capital markets division is delivering significantly higher revenue, driven by performance across trading and investment banking channels—particularly in U.S. markets and FX, which are benefiting from global volatility and deal flow ramp-up.
Improving Credit Backdrop: There’s growing confidence in easing credit conditions, with provisions decreasing and net interest margins stabilizing—suggesting the bank is transitioning from the “defense” phase into more of an “offense” approach.
U.S. Business Momentum: BMO’s U.S. P&C and wealth management businesses are gaining traction, offering a stronger growth trajectory than core Canadian operations. This geographic diversification is increasingly valued by investors.
ROE Support and Capital Management: The bank continues to deliver on return on equity (ROE) through disciplined cost control, expanded share repurchase activity, and ongoing balance sheet efficiency—underpinning the valuation case and investor confidence.
Analyst Consensus Forecast
Analysts remain cautious on Bank of Montreal, with the consensus rating sitting at Hold. Most firms see limited near-term upside, with the average 12-month price target at $163 per share,
Overall, the stock is viewed as stable, supported by BMO’s strong capital markets revenue, U.S. growth exposure, and share buybacks. However, analysts are signaling that much of the bank’s near-term strength may already be priced in, which is why the prevailing stance remains one of cautious neutrality.
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