(August 23 – 09:35 ET) – Merrill Lynch analysts are meeting this week’s bank earnings reports with opposite reactions. The brokerage is upgrading its estimates for Royal Bank and downgrading Bank of Montreal.
Merrill says it has trimmed its 2000 earnings estimate for BMO by 3% to $5.81. It has also cut the 2001 estimate by 3% to $6.40, based on Monday’s results which were 2% below consensus estimates. Merrill also reduced its intermediate opinion from buy to accumulate.
Excluding a 4¢ a share one-time gain from the sale of retail branches, BMO’ earnings per share were down 13% quarter over quarter. One-third of the decline is attributed to Bancomer, while the rest is blamed on investment banking and trading results. Merrill says the shortfall from consensus estimates can be attributed to worse than expected trading results. The brokerage had expected revenue to hold up better and notes that cost savings are slowing.
By contrast, Merrill maintains its opinion on RBC, noting that its strong numbers are “very clean” and of “very high quality”. It is raising its fourth quarter earnings estimate by 8% to $1.80, bumping its 2000 estimate by 3% to $6.89, and boosting its 2001 estimate by 3% to $7.70. Merrill is also raising its one-year price objective to $105 from $92.
-IE Staff