Canadian Imperial Bank of Commerce (CIBC) (TSX:CM) shares added more than 5% after the bank’s fiscal third quarter earnings topped estimates on higher revenues and lower provisions for credit losses.
Revenue was $6.6 billion, ahead of the $6.27 billion expected as earnings per share of $1.93 topped estimates of $1.74.
The bank set aside a provision of C$483 for credit losses, down C$253 million from the year-ago quarter and below estimates of C$569 million.
“Our strong third quarter results reflect the consistent, disciplined execution of our client-focused strategy and the diversification of our North American platform as we continue to create value for our stakeholders,” CIBC CEO Victor Dodig said in a statement.
Jefferies analysts said CIBC had “simply an impressive quarter,” raising their price target on the stock.
“While earnings benefited from lower-than-forecast provisions, we note that it signifies easing pressure on CIBC’s commercial real estate portfolio,” they wrote in a note to clients.
“We, and the market, have been impressed by the bank's execution on its strategy, and the strength of its third quarter should further bolster the momentum gained on its valuation.”
They believe investors can no longer deny that CIBC is a “changed bank” after several quarters of strong results and improved operating profitability.
“This realization should continue to support relative multiple expansion, and CM's results underscore our conviction that it should no longer trade below a market multiple,” they wrote.
“Based on CIBC's ongoing improvements and outlook, we have increased our target by $8 to $86.” Analysts also awarded the stock a ‘Buy’ rating.
CIBC’s Toronto-listed shares added 5.4% at C$77.50 late morning on Thursday.