This report was prepared by an analyst(s) employd as a research analyst(s) underFINRA rules. For disclosure statements, including
Stock Rating: Market Perform
Industry Rating: Market PerformMember of: Top 15 Quantitative Stock Selections
May 28, 2010
Research CommentToronto, Ontario
John Reucassel, CFA
BMO Nesbitt Burns Inc.(416) 359-4379John.Reucassel@bmo.comAssoc: John Fong, CFA, FSA
ed by BMO Nesbitt Burns Inc., and who is (are) not registerethe Analyst's Certification, please refer to pages 6 to 9.
CIBC reported cash EPS of $1.61. Excluding unusual items, operating cash EPSwere $1.46. The consensus estimate was $1.49. While results were relativelyclean, we suspect the share sell-off yesterday reflected relatively highexpectations going into the quarter.
Neutral. The Tier 1 ratio was healthy at 13.7% and impaired loan formationsdiminished during the quarter. Good results in credit and trading were offset bylower-than-expected spreads in retail markets.
Our 2010E cash EPS are unchanged at $6.35, and we have reduced our 2011Ecash EPS to $7.20 from $7.30 primarily due to lower spread expectations.
We have reduced our target price to $78 from $80, reflecting 10.8x our 2011Ecash EPS. CM’s valuation could improve over the next few years as it windsdown its structured credit run-off portfolio.
Q2/10 confirmed that credit trends remain on a positive trajectory. We believethat 2011E cash EPS are a reasonable reflection of “normalized” earnings.Looking through the credit recovery, it is not necessarily apparent that the bank has above-average growth potential relative to its peer group beyond 2011. CMremains Market Perform rated.
CM Relative to S&P/TSX CompLast Data Point: May 26, 2010
(FY-Oct.) 2008A 2009A 2010E 2011EEPS - Cash
-$5.80 $2.73 $6.35 $7.20
EPS - GAAP
-$5.89 $2.64 $6.28 $7.13
n/a 9.4% 20.8% 21.0%
$773 $1,505 $1,300 $1,080
$3.48 $3.48 $3.48 $3.48
Tier One Capital
10.5% 12.1% 14.1% 14.5%
Quarterly EPS - Cash Q1 Q2 Q3 Q42008A
-$4.36 -$2.98 $0.13 $1.09
$0.31 -$0.21 $1.04 $1.59
$1.60a $1.61a $1.56
Shares O/S (mm)
Mkt. Cap ($mm)
Float O/S (mm)
Float Cap ($mm)
Wkly Vol (000s)
Wkly $ Vol (mm)
Net Debt ($mm)
Next Rep. Date
All values in C$; EPS are fully diluted; Cash EPS add backamortization of intangibles throughout
First Call Mean Estimates:
CANADIAN IMPERIAL BANK COMM(C$) 2010E: $6.28; 2011E: $7.25