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Canadian Western Bank Upgraded To 'Sector Performer' By CIBC

 June 08, 2012 10:08 AM


(By Balachander) Canadian Western Bank (TSE:CWB) shares were upgraded to "Sector Performer" from "Sector Underperformer" by CIBC World Markets Inc., which says margin pressure is stabilizing and the premium now below historical levels.

"While CWB remains optimistic about continued strong loan growth, it is less sanguine about margin pressure," CIBC analyst Robert Sedran wrote in a note. "In the company's view the margin, while stabilizing, will continue to constrain revenue and EPS growth in the near term, which challenges a more positive view on the shares."

That said, Sedran downgraded the shares to "Sector Underperformer" in Q4/F11 due to acute margin pressure and high relative valuation.

The provider of commercial banking and wealth management services reported Q2/F12 core cash EPS of $0.55; just ahead of Sedran's estimate of $0.54, but below consensus of $0.56. The quarterly dividend was increased from $0.15/share to $0.16/share.

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The analyst, who has a price target of $30.00 on the stock, moved his 2012 EPS estimate to $2.28 from $2.27, and kept 2013 EPS estimate at $2.48.

Results were generally in line with expectations with little variance in most major income statement lines. Higher securities gains largely offset the impact of higher expenses, while most revenue lines were within the margin of error of our forecasts, the analyst wrote.

CWB shares dipped 0.23 percent to trade at $26.47 on Friday on the Toronto Stock Exchange.

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