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Bank of Montreal (NYSE:BMO) shares surged on Tuesday after it released its fiscal third quarter results, and the shares continued to edge higher on Wednesday. In late-morning activity, they traded at $53.10, up 80 cents or $1.15.

Investors might be celebrating, but analysts so far have maintained their previous recommendations on the stock. Here are two reactions:

Brad Smith, Blackmont Capital:

We believe earnings quality continues to be below average. In particular, we are concerned about the adequacy of credit allowances and the sustainability of reported net interest margins, which have benefited heavily from the steepening of the yield curve....

Despite these noted risks to future earnings, dividend growth, and profitability, BMO shares currently trade at valuations that are modestly above its other domestic peer banks at 13.2 times our 2010 cash [earnings per share] estimate of $3.95.

Michael Goldberg, Desjardins Securities:

We are increasing our [earnings per share] forecast for 2009 to $2.90 (from $2.15) and our EPS forecast for 2010 to $3.75 (from $3.35). The higher EPS forecasts mainly reflect increases in our forecasts for trading revenues and reductions in our forecasts for loan losses. We have reduced our forecast loan loss levels to $1.6-billion from $2-billion for both 2009 and 2010.

Based on these EPS forecasts, we are still forecasting a 75 per cent dividend payout on 2010 EPS and, therefore, we do not see any visibility of a dividend increase. Furthermore, we do not expect dividends to increase until sustainable annual earning power is well above $5 [a share].

Source: Bank of Montreal: No Dividend Growth Here