Bank of Montreal BMO

Narrow-moat-rated Bank of Montreal reported solid fiscal first-quarter earnings. Adjusted earnings per share were CAD 3.06, soundly beating FactSet consensus of CAD 1.69. This represented year-over-year EPS growth of 27%, as revenue growth has returned while expenses were down. Provisioning was also back to its lowest level since early 2019. This largely aligns with our view that the Canadian banks will be fine and that better results should be returning in 2021. We are increasing our fair value estimate to CAD 109/$86 per share from CAD 105/$81. As the pandemic has further played out and we are more confident in vaccine distribution and economic resilience, we are also lowering our uncertainty rating for Bank of Montreal back to medium from high.