Broker Eight Capital turned a bit sour on Bank of Montreal today (TSE:BMO) after the banking group posted what it called a 'mixed' second quarter.
The broker repeated a 'neutral' stance and has reduced the target price by $1 to $100 on the back of a slow-down in momentum in the US and increased challenges in the Canadian banking sector.
A challenging sector...
Marked for the sector in the second quarter generally was lower revenue growth and negative operating leverage, it said.
Analyst Steve Theriault noted the Bank of Montreal reported second quarter adjusted EPS (earnings per share) for 2017 of $1.92, which was $0.01 below consensus but $0.02 above the broker's forecast.
"After a very strong start to 2017 in Q1/17, these results appear decidedly mixed," he said.
"While the Wealth Management division beat expectations and the drag from Corporate was lower than expected, both Canadian and U.S. banking earnings came in below our and street estimates."
The former, he said, experienced negative operating leverage and light revenue growth and the latter experienced higher credit losses and less margin improvement than anticipated.
Reduced loan growth estimates..
Theriault also said the broker had reduced its loan growth estimates for the firm given recent near term industry trends and more bearish guidance from US competitors.
It forecasts around a 2% decline in loans in the second half of 2017.
BMO shares eased 0.74% to stand at $91.30.