CANACCORD UPGRADES RBC ON RESISTANCE TO DOWNTURN
Royal Bank of Canada was upgraded to buy from hold at Canaccord Genuity due to its leverage to rising interest rates, comparatively strong capital position and attractive capital management program, and its relative resistance to an economic downturn.
Analyst Gabriel Dechaine raised his price target on RBC shares to $89 from $85, following an exploration of what a growth slowdown — triggered by a housing market crash — might mean for the Canadian banking sector.
He estimates earnings for the group could fall by 11 per cent on average in this scenario.
But Dechaine remains positive on the sector, noting it offers investors high and sustainable dividend yields, reasonable valuations, a relatively stable regulatory environment, and the capacity to exceed earnings expectations.