RBC raises price target on EQB

EQB’s (EQB Stock Quote, Chart, News, Analysts, Financials TSX:EQB) PC Financial acquisition remains the central growth story for RBC Dominion Securities analyst Darko Mihelic, even after a credit-heavy Q3 miss.

As reported by the Globe and Mail, in an Aug. 28 update, Mihelic reaffirmed his “Outperform” rating on EQB and raised his target to $146.00 from $131.00.

“EQB’s standalone business weakened sequentially in a meaningful way, but we view PCF’s 1-month adjusted contribution to results positively,” Mihelic said.

EQB shares fell 6.6% Thursday after the bank reported adjusted EPS of $2.12, below Mihelic’s $2.31 estimate and consensus at $2.21.

Mihelic said the miss was mainly due to higher-than-expected performing loan provisions and non-interest expenses, partly offset by stronger revenue.

Adjusted provisions excluded a $219.1-million day-one provision on performing loans tied to the PC Financial credit card acquisition.

EQB completed the PC Financial acquisition July 1. Mihelic said the bank captured $15-million of annualized pre-tax expense synergies in the first month after closing, putting it on track toward its $30-million two-year target.

PC Financial contributed $9.5-million to adjusted net income in the one month included in Q3, above the roughly $8.1-million monthly pro forma contribution implied when the deal was announced.

Mihelic lowered his core EPS estimates to $8.96 from $9.31 for 2026 and to $11.26 from $12.04 for 2027, while introducing a 2028 estimate of $13.90.

Even after the revisions, he expects core EPS growth of 26% in 2027 and 23% in 2028.

“The sheer scale of change creates a big opportunity and risk for EQB but we land on the opportunity side, in our view,” Mihelic said.

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