National Bank Raises Bank of Montreal (BMO) Price Target While Maintaining Sector Perform

Bank of Montreal (NYSE:BMO) is included among the 14 Best GARP Stocks to Buy According to Analysts.

On February 26, National Bank analyst Gabriel Dechaine raised the price recommendation on Bank of Montreal (NYSE:BMO) to C$205 from C$186. The analyst reiterated a Sector Perform rating on the shares.

On February 25, the bank reported first-quarter profit that exceeded analyst expectations. The results were supported by lower provisions for potential loan defaults. BMO also reported record revenue across all of its business segments. Growth was driven in part by strong fee income from wealth management and capital markets. Adjusted earnings in those divisions increased by 16% and 11%, respectively.

The bank has also taken steps to strengthen its US operations. It reduced exposure to bad loans to ease pressure on loan loss provisions. It closed some branches following the acquisition of Bank of the West and shifted its loan portfolio toward higher-margin commercial lending. These actions supported performance in the U.S. segment, which reported 13% growth in adjusted net income. In Canada, earnings increased 8% as the bank focused on expanding deposits and growing new lending areas. CEO Darryl White made the following comment:

“By the end of next quarter, we will be effectively complete with our balance sheet optimization efforts and expect to see positive commercial loan growth in the second half of the year, supported by currently strong pipelines. With the U.S. economy expected to outpace Canada for a fourth straight year, and with our business mix, we’re well-positioned to capture growth opportunities as business activity expands.”

BMO reported adjusted profit of C$2.55 billion ($1.86 billion) for the quarter ended January 31. This compares with C$2.29 billion in the prior period. On a per-share basis, adjusted earnings came in at C$3.48, above the analyst estimate of C$3.20.

Bank of Montreal (NYSE:BMO) is a North American financial institution that provides personal and commercial banking, wealth management, global markets, and investment banking products and services.

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