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BMO_Research Highlights May 28

BMO_Research Highlights May 28

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Published by: smutgremlin on May 28, 2010
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May 28, 2010
TODAY'S HIGHLIGHTS
 
Canada/Int'l
 
FINANCIALSBanks Canada CIBCQ2/10 EarningsBanks Canada CIBCQ2/10 Earnings: Credit and Capital Stronger Than...Banks Canada Royal BankQ2/10 Earnings; The Burden of High ExpectationsBanks Canada Royal BankQ2/10 Earnings: A Weak Quarter Relative to...Banks Canada TD BankSolid Q2/10 EarningsBanks Canada TD BankQ2/10 Earnings: Positive Momentum on the Asset...ENERGY & UTILITIESOil & Gas Sector CommentAlberta Royalty Changes: Another Positive Surprise for...Integrated Oils Canada Cenovus EnergyUpgraded to Outperform; Highlights From Investor...North American E&P Canada Paramount ResourcesUpdated Resource Evaluation of Hoole Oil Sands LeasesNorth American E&P Sector CommentAlberta Royalty Curves Finalized; Natural Gas Deep...MATERIALSMetals & Mining Sector CommentMining & Commodity Roundup - May 27, 2010Fertilizers Int'l Legend Int'l HoldingsStill Waiting for WengfuFertilizers Canada Potash OneFeasibility Capex/Tonne Rising But All-Inclusive
 
CONSUMERFood Prod. Sector CommentKey Takeaways and Stock Implications from Our Barbecue...TECH/TELECOM/MEDIAEnterprise Hardware Sector CommentNotes from the Road - Bus Tour RecapSpecialty Hardware Canada Zarlink SemiconductorQ4/10 Revenues Above Forecast and ConsensusHEALTH CAREBiotech Canada TheratechnologiesAfter Panel, We Expect FDA Approval of EgrifaMACROQuantitative/Technical Market ElementsDaily Quantitative CommentaryQuantitative/Technical Relative Strength FilterAsia Credit WatchEconomics A.M. NotesDaily Economic Commentary
 
 
This report was prepared by an analyst(s) employd as a research analyst(s) underFINRA rules. For disclosure statements, including
CIBC
(CM-TSX; CM-NYSE)
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
Q2/10 Earnings
Price (27-May)
$72.02
52-Week High
$77.38
Target Price
$78.00

52-Week Low
$52.25
ed by BMO Nesbitt Burns Inc., and who is (are) not registerethe Analyst's Certification, please refer to pages 6 to 9.
Event
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.
5678910
CIBC (CM)
Price: High,Low,CloseEarnings/Share
20406080100
 
Impact
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.
Forecasts
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.
Valuation
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.
Recommendation
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.
050100
Volume (mln)
0501002005200620072008200950100150
CM Relative to S&P/TSX CompLast Data Point: May 26, 2010
50100150
 
(FY-Oct.) 2008A 2009A 2010E 2011EEPS - Cash
-$5.80 $2.73 $6.35 $7.20
P/E
11.3x 10.0x
EPS - GAAP
-$5.89 $2.64 $6.28 $7.13
P/E
11.5x 10.1x
Cash ROE
n/a 9.4% 20.8% 21.0%
Specific Prov.
 
($mm)
$773 $1,505 $1,300 $1,080
Dividend
$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
2009A
$0.31 -$0.21 $1.04 $1.59
2010E
$1.60a $1.61a $1.56
$1.58
 
Dividend
$3.48
Yield
4.8%
Book Value
$30.00
Price/Book
2.4x
Shares O/S (mm)
388.5
Mkt. Cap ($mm)
$27,977
Float O/S (mm)
388.5
Float Cap ($mm)
$27,977
Wkly Vol (000s)
8,414
Wkly $ Vol (mm)
$542.5
Net Debt ($mm)
na
Next Rep. Date
25-Aug (E)
Notes:
All values in C$; EPS are fully diluted; Cash EPS add backamortization of intangibles throughout
Major Shareholders:
Widely held
First Call Mean Estimates:
CANADIAN IMPERIAL BANK COMM(C$) 2010E: $6.28; 2011E: $7.25
 
Changes 
Annual EPS
 
Annual EPS
 
Quarterly EPS
 
Target 
2011E
 
$7.30
 
to
 
$7.20
 
2011E
 
$7.23
 
to
 
$7.13
 
Q3/10E
 
$1.57
 
to
 
$1.56
 
$80.00
 
to
 
$78.00
 
Q4/10E
 
$1.59
 
to
 
$1.58
 

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