Mr. Aiken, who had a sell rating on the stock previously, placed CIBC's price target under review, noting the bank's balance sheet concerns should lessen after the company reported charges well below his estimates.
CIBC shares jumped nearly 4% to C$59.09 in the first minutes of trading on Wednesday.
In a note to clients he wrote:
The pre-tax capital market charges of C$885-million were well below our estimate of between C$1.5 and C $1.9-billion. This should relieve much of the near term concerns regarding its balance sheet and shift valuation more towards its earnings outlook.
Mr. Aiken said CIBC's valuation should benefit as a result but cautioned clients that CIBC still remains exposed to additional potential write-downs.
We will likely be attributing a higher multiple given that the likelihood of another common equity raise has subsided, although it has still not disappeared completely. That said, we do not believe that CIBC should garner a market multiple or above until it is clear that the probability of additional substantial losses in its run-off businesses has declined materially.