(Recasts; adds details)
Oct 7 (Reuters) - RBC Capital Markets cut its estimates and
price targets on several Canadian insurers and banks, including
Bank of Montreal (BMO.TO) and Canadian Imperial Bank of
Commerce (CM.TO), to reflect the deteriorating macroeconomic
environment.
As factors for the price target cuts, the brokerage cited
weak equity markets, increases in short-term funding costs and
the continued deterioration in the U.S. economy, which raises
the odds of the Canadian economy weakening.
The brokerage lowered its investment rating on insurer
Manulife Financial (MFC.TO) to "sector perform" from
"outperform," saying the stock price has remained "relatively
strong in the context of a rapidly deteriorating macro
environment."
"The fallout of the global financials crisis could lead to
attractive buying opportunities for financial services
companies that are well capitalized, well funded, and have
manageable credit exposures," RBC Capital analysts said.
Manulife, Sun Life Financial Inc (SLF.TO), Bank of Nova
Scotia (BNS.TO), Royal Bank of Canada (RY.TO) and ING Canada
Inc IIC.TO are best positioned to take advantage of potential
acquisition opportunities, the brokerage said.
RBC Capital said it sees more near-term risk in Canadian
life insurance companies than banks as they are more affected
by equity markets.
The brokerage said its favorite stocks are Industrial
Alliance Insurance and Financial Services Inc (IAG.TO), Sun
Life and ING Canada.
The brokerage changed its price targets on the following
Canadian banks and insurers:
COMPANY Price Target (In
C$)
New Old
Bank of Montreal (BMO.TO) 42 44 Bank
of Nova Scotia 46 49 Canadian
Imperial Bank of Commerce (CM.TO) 60 65 National Bank
of Canada (NA.TO) 50 53 Royal Bank of
Canada (RY.TO) 49 50 TD Bank Financial
Group (TD.TO) 65 69 Great-West Lifeco Inc
(GWO.TO) 31 34 Industrial Alliance
38 42 Manulife
36 40 Sun Life
43 47
(Reporting by Anurag Kotoky in Bangalore; Editing by Deepak
Kannan)
Stocks | Bonds | Global Markets
