On Wednesday, RBC (TSX:RY) Capital Markets revised its stance on shares of Bank of Montreal (TSX:BMO:CN) (NYSE: BMO), elevating the bank's stock rating from Sector Perform to Outperform. Accompanying the upgrade, the firm also increased its price target for the bank's shares from Cdn$133.00 to Cdn$161.00.
The upgrade by RBC Capital's analyst comes with a positive outlook on the bank's financial health and future performance. In a statement, the analyst expressed confidence that Bank of Montreal has effectively navigated past its credit concerns, which previously clouded its valuation prospects.
Bank of Montreal's stock now boasts the highest return to target among its Canadian peers, as covered by RBC Capital. This potential upside is approximately 20%, a significant margin that underscores the analyst's optimism regarding the bank's valuation.
The new price target of Cdn$161.00 reflects a forward-looking approach by RBC Capital, as the firm has moved to incorporate its 2026 core earnings per share (EPS) estimates into the valuation models for the group. This adjustment signals an expectation of robust earnings growth for Bank of Montreal in the coming years.
Investors and market watchers will likely monitor Bank of Montreal's performance closely, following the upgraded rating and increased price target, to see if the bank meets or exceeds the expectations set forth by RBC Capital Markets.
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