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EQB stock is undervalued, CIBC says


Not all banks are boring.

CIBC World markets analyst Paul Holden says he has identified one that is positively exciting in EQB (EQB Stock Quote, Chart, News, Analysts, Financials TSX:EQB).

As reported by The Globe and Mail April 1, Holden launched coverage of EQB March 31 with an “Outperformer” rating and price target of $100.00.

“EQB is trading at a 7.2 times P/E (NTM [next 12-month] consensus) and 1.19 times P/BV, both of which are quite close to historical averages,” the analyst wrote. “This is despite EQB’s higher EPS growth, higher ROE, lower PCLs and higher CET1 ratio,” he said. “We are not counting on a multiple re-rate to support our Outperformer thesis; forecast EPS growth alone would get us there, but we also believe there is far more potential for the multiple to move higher than lower in coming years.”

The analyst says the dearth of mortgages is affecting EQB less than its peers.

“Despite the slowdown in single-family residential (SFR) mortgage growth, we expect EQB to grow loans under management by double digits this year and next,” he wrote. “This is a huge growth advantage relative to the big banks where we expect loan growth to be more in the low to mid-single digits.”

At press time, shares of EQB were down 0.5 per cent to $84.525.


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