BMO Upgraded as It Avoids Another Major Write-Down

Andre Hardy of RBC Capital Markets has upped his target price for Bank of Montreal (BMO) stock after it avoided another major write-down to add to its recent spate of one-off charges.

Earlier this month, BMO announced that it had successfully restructured two asset-backed commercial paper trusts, and thus the bank sidestepped a possible C$495-million charge, and ended two related legal disputes that had threatened to take a C$1-billion bite out of the bottom line.

Even after the restructuring, BMO could still take losses down the road but it is now a “low probability,” Mr. Hardy said.

RBC rates the stock “underperform,” and raised the 12-month target price for BMO shares from C$43.00 to C$44.00.

Mr. Hardy also said it is still not time to buy Canadian banks aggressively, despite a recent rally for U.S. and Canadian bank stocks. “The road ahead for bank shares will be bumpy,” he said.