Monday, March 20, 2006

UBS Raises BMO Target Price

The Globe and Mail, Angela Barnes, 20 March 2006

UBS Securities Canada Inc. has upped its 12-month price target for Bank of Montreal to $71 from $67, but maintained its “neutral” rating on the stock. The bank closed Monday at $66.17 on the Toronto Stock Exchange.

Jason Bilodeau, who follows the bank for UBS, made the change after spending time marketing with BMO's newly appointed chief operating officer, Bill Downe, in Europe. Mr. Downe is one of the front runners to replace Bank of Montreal chief executive officer Tony Comper, who is set to retire in April, 2007.

“For the most part, we found investors to be fairly receptive to the BMO story, particularly its track record of consistent credit management as many investors remain focused on the outlook for credit trends,” Mr. Bilodeau said in a report Monday. Investors were also particularly interested in BMO's Chicago-based Harris Bank and U.S. acquisitions, he added.

Mr. Bilodeau noted that BMO continues to hold excess capital in anticipation of acquisition opportunities in the United States. The analyst said transactions in the order of $200-million (U.S.) to $500-million appear to be more likely than larger deals, although larger deals are not out of the question. “If there are not reasonable acquisitions prospects, we see management returning capital to shareholders via buybacks, dividends or possibly special dividends,” he said.