BMO Capital Markets hiked its 2024 price target for the on Wednesday, citing sustained robust market momentum.
Initially, the investment bank set the year-end target at 5,100 in February, expressing concerns over rapid equity performance post-October 2023 rebound. However, analysts now acknowledge they have underestimated market strength, saying investor expectations and Federal Reserve policy have since aligned.
After turning bullish on US equities, BMO is now also revising its expectations for the Canadian market.
Specifically, the firm’s analysts have upped their S&P/TSX price target to 24,500 from 23,500, on Thursday, a move that represents a 4% increase to their price target.
According to BMO, the upward adjustment “reflects multiple signs that both sentiment and revision trends have bottomed and are beginning to improve, which we believe will be a key tailwind for valuation expansion into year-end.”
“We are not increasing our 2024 EPS target at this point, given the bottoming of revision trends are likely more supportive of 2025 EPS. As such, our 2024 implied P/E ratio increases to 16.3x from 15.7x, this is still well below the long-term average multiple of 17x,” they added.
Overall, unlike last year, when the big three sectors underperformed, two of the three largest sectors in the TSX are sharply outperforming this year, BMO pointed out. Moreover, performance is broadening, with a focus on fundamentals.
Analysts also believe this indicates Financials and other non-big three sectors are poised for a strong rebound and catch-up trade in the year’s second half.
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