RBC Capital Markets analyst Geoffrey Kwan told clients that a distribution and white label agreement with the bank is likely in the near term, but cautioned investors from concluding that such an arrangement would materially impact CI's current value.
While maintaining his "sector perform" rating and C$23 price target, he added that only a more eventful deal between CI and Scotia down the road could act as a catalyst for the shares.
Mr. Kwan said in a note to clients:
We still believe a material value creating transaction with Scotiabank (e.g., Scotiabank acquisition of CIX or the vending in of some or all of Scotiabank's asset management operations into CIX) is unlikely in the near term, but inevitable over the medium to long term, providing valuation upside for investors with a longer-term investment horizon.
Under a white label service agreement, Scotia would offer CI-branded products and services.