Broker Eight Capital has downgraded the National Bank of Canada (TSE:NA), the smallest of the 'big six' Canadian banks, on valuation grounds.
Shares are up 17% in the year to date against the bank peer group, which has risen about 10%.
Steve Theriault, analyst, said he believed the shares would "take a pause in terms of outperformance" into 2018.
He cites several reasons, including that the upside to EPS (earnings per share) from the firm's expense initiatives is now more fully reflected in the share price.
Also that the very strong growth in the finance house subsidiary Credigy will decelerate in 2018 with credit losses moving higher in the first half of 2018.
The analyst also said in the note that gains on AFS securities were likely to decline next year after an elevated contribution in 2017.
The broker's EPS (earnings per share) estimates were unchanged, but the target price, improved to C$67 from C$66, he also notes.
Shares on Monday were changing hands, up 0.39% to C$63.99 each.
Buybacks appear likely to continue through 2018, with CEO Louis Vachon telegraphing that the bank will utilize its current program and likely renew it by Q3/18, said Theriault.
"Our forecasts include a 2% buyback for this coming year."