T.D. Bank Receives a Buy from TD Securities

By Carrie Williams

T.D. Bank (TSX: TD), the Financial sector company was revisited yesterday, and remains undervalued for at least one analyst on the street. The company received a Buy rating from TD Securities’ analyst Mario Mendonca, with a C$75 price target.

Mendonca noted:

“Weaker-than-expected trading was offset by strong underwriting/advisory revenue and higher AFS gains. PCLs were lower than expected. Much lower U.S. retail PCLs reflect seasonal trends in cards and indirect-auto. Indirect-auto and cards in Canada and the U.S. are not showing evidence of material credit deterioration. Expenses increased 3% y/y and were lower than expected.”

According to TipRanks.com, Mendonca is a 3-star analyst with an average return of 4.7% and a 75.0% success rate. Mendonca covers the Financial sector, focusing on stocks such as Canadian Bank of Commerce, Manulife Financial Corp, and Royal Bank Of Canada.

Currently, the analyst consensus on T.D. Bank is Moderate Buy and the average price target is C$71, representing a 10.5% upside.

In a report released yesterday, Credit Suisse also maintained a Buy rating on the stock with a C$72 price target.

Based on T.D. Bank’s latest earnings report for the quarter ending January 31, the company posted quarterly revenue of C$11.11 billion and quarterly net profit of C$2.5 billion. In comparison, last year the company earned revenue of C$9.94 billion and had a net profit of C$2.02 billion.

The Toronto-Dominion Bank engages in providing financial products and services. The bank operates through the following business segments: Canadian Retail, U.S. Retail and Wholesale Banking. The Canadian Retail segment offers various financial products and services, as well as telephone, Internet, and mobile banking services. This segment offers financing, investment, cash management, international trade services, and day-to-day banking needs to medium and large Canadian businesses; financing options to customers at point-of-sale for automotive and recreational vehicle purchases through its auto dealer network; credit cards; direct investing, advice, and asset management services to retail and institutional clients; and home, auto, credit protection, travel, and life and health insurance products, as well as credit card balance protection products through direct channels. The U.S. Retail segment provides retail and commercial banking services, as well as wealth management services in the United States. This segment offers its financial products and services through a network stores located along the east coast from Maine to Florida; telephone, mobile, and Internet banking; and automated banking machines. The Wholesale Banking segment provides a range of capital markets, investment banking, and corporate banking products and services comprising underwriting and distribution of new debt and equity issues; advising on strategic acquisitions and divestitures; and meeting the daily trading, funding, and investment needs to companies, governments, and institutions in financial markets worldwide. The Toronto-Dominion Bank was founded on February 1, 1955 and is headquartered in Toronto, Canada.

The company’s shares closed last Friday at $64.25.