BMO Capital Markets raised its 2024 price target on Wednesday, citing strong market performance.
The investment bank initially set its year-end target at 5,100 in February, citing concerns about rapid capital growth following a recovery in October 2023. But analysts now admit they underestimated the market’s strength, saying investor expectations and Federal Reserve policy have since aligned.
After being bullish on US stocks, BMO is now also revising its expectations for the Canadian market.
Notably, the company’s analysts raised their S&P/TSX price target to 24,500 from 23,500 on Thursday, representing a 4% increase from their price target.
According to BMO, the upward revision “reflects multiple signs that both sentiment and revision trends have bottomed out and are beginning to improve, which we believe will be a key tailwind for valuation growth later in the year.”
“We are not increasing our 2024 EPS target at this stage as the lower end of the revision trends is likely to be more favorable for 2025 EPS. Our implied 2024 P/E ratio would therefore increase from 15.7x to 16.3x, which is still well below the long-term average of 17x,” they added.
Overall, unlike last year, when the big three sectors underperformed, two of the TSX’s three biggest sectors are sharply outperforming this year, BMO said. Moreover, performance is expanded with a focus on fundamentals.
Analysts also believe this indicates that the financial sector and other smaller three sectors are poised for a strong recovery and catch-up trading in the second half of the year.
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