{"id":543376,"date":"2010-04-26T12:25:00","date_gmt":"2010-04-26T16:25:00","guid":{"rendered":"e2249889-c78b-43e3-9643-b1d7d4aa587b:428660"},"modified":"2010-04-26T12:25:00","modified_gmt":"2010-04-26T16:25:00","slug":"royal-bank-upgraded-to-outperform-at-bmo","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/543376","title":{"rendered":"Royal Bank upgraded to Outperform at BMO"},"content":{"rendered":"<p><a href=\"http:\/\/www.financialpost.com\/markets\/company\/index.html?symbol=RY&amp;id=98998\" >Royal Bank of Canada<\/a> was upgraded to Outperform from Market Perform at BMO Capital Markets. Analyst John Reucassel also hiked his price target on shares of Canada\u2019s largest bank to $67 from $63 after strong results from U.S. banks suggest credit conditions and the business environment are improving faster than expected.<\/p>\n<p>In a note to clients, Mr. Reucassel pointed out that when bank stocks are upgraded in between quarters this often suggests some particular insight into the next set of earnings. But that isn\u2019t the case this time around. In fact, Royal Bank came up shy of the Street\u2019s expectations in the past two quarters, which might explain why the stock has <br \/>underperformed the Canadian bank index in 2010.<\/p>\n<p>Instead, the analyst\u2019s conviction comes from a belief that Royal Bank has a number of franchises that should benefit from an improving business environment beyond the cyclical recovery in provisions for credit losses. He said its wealth management, insurance and domestic retail banking businesses will provide good earnings leverage beyond this year.<\/p>\n<p>\u201cIn 2010, a better environment should lower losses in U.S. retail banking,\u201d Mr. Reucassel said, adding that strong trading results from the large U.S. banks could increase expectations for Royal Bank\u2019s second quarter 2010 trading revenue. However, the analyst left his trading estimate for the quarter unchanged at $1-billion.<\/p>\n<p>\u201cLooking past the recovery in loan losses, we believe that Royal has amongst the most attractive potential earnings growth rates in the group due to large asset management and insurance operations as well as consistent results from domestic banking,\u201d Mr. Reucassel said. \u201cRegulatory and government actions (in response to the recent crisis) should be the biggest risk to Royal investors, particularly vis-a-vis wholesale banking.\u201d<\/p>\n<p>While the timing of acquisitions is unknown given the uncertainty surrounding new capital rules, regulatory rules should become more clear by fall 2010. Given that economic conditions continue to improve, the analyst expects the regulator to provide banks with more flexibility in decisions on how to fund acquisitions. \u201cThis could be a major catalyst for Royal Bank.\u201d <\/p>\n<p><a href=\"mailto:jratner@nationalpost.com\">Jonathan Ratner<\/a> <\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/network.nationalpost.com\/NP\/aggbug.aspx?PostID=428660\" width=\"1\" height=\"1\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Royal Bank of Canada was upgraded to Outperform from Market Perform at BMO Capital Markets. Analyst John Reucassel also hiked his price target on shares of Canada\u2019s largest bank to $67 from $63 after strong results from U.S. banks suggest credit conditions and the business environment are improving faster than expected. In a note to [&hellip;]<\/p>\n","protected":false},"author":4059,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-543376","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/543376","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/4059"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=543376"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/543376\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=543376"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=543376"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=543376"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}