CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:
We increase our target price by $8 to $99, 11.3x our FY 25 (Oct.) EPS view ($8.77 converted from CAD), a minimal discount to RY’s five-year forward P/E of 11.7x given a weaker Canadian economy. We raise our FY 24 EPS to CAD11.51 from CAD11.09 and increase FY 25’s to CAD11.91 from CAD11.35. RY posted adjusted Jan-Q EPS of CAD2.85 vs. CAD3.04 a year ago, beating the CAD2.79 consensus. Net interest income rose 2% Y/Y given strength in trading and volume growth in Canadian Banking. Capital Markets saw revenue fall 6% as higher M&A activity was offset by lower equity trading revenue. RY’s core expense growth rose 2% on higher professional fees and improvements to City National. Importantly, RY’s acquisition of HSBC Canada is expected to close on March 28 (originally expected late 2023). The acquisition should help RY return to positive operating leverage in FY 24 and FY 25 with CAD740M of expense synergies expected within two years. However, we maintain a Hold rating given declining credit quality expectations.