Wednesday, January 17, 2007

Merrill Lynch Upgrades CIBC

Financial Post, Jonathan Ratner, 17 January 2007

The potential for a slowdown in capital markets and commercial loan losses are two major business risks for Canada’s biggest banks. But with business and government loans contributing the smallest portion of Canadian Imperial Bank of Commerce’s (CIBC) total loan portfolio, according to Merrill Lynch analyst Andre-Philippe Hardy, the bank is less-exposed to loan losses than its peers.

Meanwhile, CIBC’s earnings from capital markets activity puts it second-lowest among the Big 6 Canadian banks, he said in a research note.

Mr. Hardy sees nearly 9% upside for CIBC shares and has a $108 price target on them. He has also upgraded his rating on CIBC shares to “buy” from “neutral,” saying the company fits his firm’s defensive stance.

Mr. Hardy expects CIBC’s earnings per share will rise 16% in 2007, the most among Canadian banks, thanks to cost containment measures, declining retail credit losses and higher investment in FirstCaribbean International Bank.

Bloomberg, 17 January 2007

The country's fifth-biggest lender by assets was raised to ``buy'' from ``neutral'' by Merrill Lynch Canada's Andre-Philippe Hardy in Toronto. The analyst raised his profit estimates for 2007, 2008 and 2009, saying in a note that CIBC's profit and dividend growth are likely to outpace that of its peers, due to its cost savings initiatives and because it is less exposed to rising loan losses.