Morgan Stanley Upgrades Grupo Financiero Galicia to Overweight From Underweight, $92 Price Target

Canadian Imperial Bank of Commerce CM is scheduled to report fiscal fourth-quarter 2024 results (ending Oct. 31) on Dec. 5 before the opening bell. The company’s quarterly earnings and revenues are expected to have improved on a year-over-year basis.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

Its last reported-quarter results benefited from an improvement in revenues and lower provisions. Also, loans and deposit balances increased in the quarter. However, higher expenses were an undermining factor.

CM has an impressive earnings surprise history. The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with the average beat being 6.65%.

Canadian Imperial Bank of Commerce Price and EPS Surprise

Canadian Imperial Bank of Commerce price-eps-surprise | Canadian Imperial Bank of Commerce Quote

Key Factors to Affect CM's Q4 Results

Net Interest Income: The Bank of Canada has continued to ease monetary policy since June this year. CM has since cut interest rates four times, including a 50-basis-point reduction in October, bringing the policy rate from its peak of 5% at the beginning of the year to 3.75%.

While the rate cut is not expected to have significantly affected CM’s net interest income (NII) in the quarter under review, greater clarity on the rate cut path and stabilizing macroeconomic scenario are likely to have aided the lending outlook. This is likely to have aided CM’s top line to some extent in the fiscal fourth quarter.

Non-Interest Income: Amid the falling rate environment and equity markets trading at or near all-time highs, the landscape for both debt and equity financing activity remains positive. Global mergers and acquisitions in the quarter under review also showed signs of improvement. Further, green shoots were observed in the capital markets. This is likely to have supported Canadian Imperial trading revenues. Thus, investment banking fees are likely to have improved in the quarter to be reported.

Further, with an improved lending scenario, CM’s credit fee is likely to have witnessed an increase in the quarter to be reported. Also, increased consumer spending is expected to have supported the company’s card fees. Thus, CM’s transactional fees are expected to have improved in the fiscal fourth quarter.

Rise in Expenses: Canadian Imperial has been facing a rise in expenses in the past several quarters. The same trend is likely to have persisted in the to-be-reported quarter as the company continues to invest in its business.

CM’s Earnings & Sales Estimates for Q4

The Zacks Consensus Estimate for CM’s fiscal fourth-quarter earnings is pegged at $1.26 per share, unchanged in the past seven days. The estimate indicates an 8.6% rise from the year-ago quarter’s reported number.

The consensus estimate for sales is pegged at $4.67 billion, indicating an increase of 8.5% on a year-over-year basis.

Earnings Whispers for CM

Our quantitative model does not conclusively predict an earnings beat for CM this time. This is because it does not have the right combination of the two key ingredients—a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).

You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Earnings ESP: CM presently has an Earnings ESP of -0.26%.

Zacks Rank: The company currently carries a Zacks Rank #3.

Foreign Bank Stocks Worth Considering

Some better-ranked bank stocks are NatWest Group plc NWG and Grupo Financiero Galicia S.A. GGAL, each sporting a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for NWG’s earnings has been revised 3.3% upward for 2024 in the past month. Shares of NWG have gained 29.8% in the past six months.

The earnings estimates for GGAL have been revised 8.4% upward for 2024 in the past month. In the past six months, GGAL shares have surged 88.2%.

Zacks Investment Research

UBS Group AG UBS is on track to gain full ownership of its securities venture in China, UBS Securities Co. Limited (“UBS-S”). This move comes as UBS’ joint venture (JV) partner, Beijing State-owned Asset Management (“BSAM”), announced its decision to sell a 33% stake in UBS-S, per Reuters.

BSAM is auctioning its stake for 1.5 billion yuan ($207.10 million), according to the China Beijing Equity Exchange. At present, UBS Group AG owns a 67% stake in UBS-S and is expected to bid for the remaining shares.

An UBS executive confirmed to Reuters on Tuesday that, "As indicated earlier, the process for UBS to increase its stake in UBS Securities to 100% is in progress.”

UBS’ Strategic Actions to Expand Presence in China

UBS’ latest move to acquire the remaining stake in UBS-S to secure full ownership represents the second phase of UBS Group AG's efforts to streamline operations and increase its presence in China. The first phase included UBS’ divestiture of its stake in Credit Suisse Securities (China) Ltd. to BSAM in June 2024.

Notably, UBS Group AG acquired Credit Suisse in 2023, through which it inherited Credit Suisse’s securities unit.

The recent move highlights UBS’ strategic focus on strengthening its footprint in China to position itself for long-term growth in the world’s second-largest economy.

UBS’ Other Expansion Efforts in Key Growth Markets

Last week, UBS announced that it is seeking a wider banking license to operate in the United States, as the bank views the country as a crucial market for its growth strategy. This was reported by Bloomberg. UBS is considering an application for broader operational permission from the Office of the Comptroller of the Currency.

In October 2024, UBS’ Chairman Colm Kelleher said that the bank’s long-term vision includes acquiring a U.S. wealth management firm to accelerate growth in the region.

According to a Reuters report from September 2024, UBS is in discussions to form an Indian wealth management JV with 360 One WAM, a Mumbai-based firm, formerly known as IIFL Wealth Management. This potential JV is expected to expand UBS’ Indian wealth management business to high-net-worth individuals in addition to its existing ultra-high-net-worth individuals.

UBS’ efforts to increase its presence in such rapidly growing markets are likely to help the bank capitalize on these country’s growing economies and diversify its market and revenue streams.

UBS Group AG’s Price Performance & Zacks Rank

Over the past six months, UBS shares have gained 3.8% on the NYSE against the industry’s decline of 9%.

Currently, UBS Group carries a Zacks Rank #3 (Hold).

Foreign Banks Worth Considering

Some better-ranked bank stocks are NatWest Group plc NWG and Grupo Financiero Galicia S.A. GGAL, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for NWG’s earnings has been revised 3.3% upward for 2024 over the past month. Shares of NWG have gained 24.7% over the past six months.

Earnings estimates for GGAL have been revised 8.4% upward over the past 30 days. In the past six months, GGAL shares have surged 70.9%.

Zacks Investment Research

UBS Group AG UBS is seeking a wider banking license to operate in the United States to simplify its ability in order to offer loans and accept deposits in the country.

UBS views the United States as a crucial market for its growth strategy. According to a Bloomberg report, the bank is considering an application for broader operational permissions under the Office of the Comptroller of the Currency.

UBS Group AG’s CEO, Sergio Ermotti, identifies the U.S. wealth management sector as a vital growth area, particularly after the acquisition of Credit Suisse in 2023. This aligns with UBS’ Chairman Colm Kelleher's statement from last month, where he mentions the bank’s long-term vision that includes acquiring a U.S. wealth management firm to accelerate growth in the region. However, this goal will only be pursued after the full integration of Credit Suisse.

UBS Strengthens US Operations

The acquisition of Credit Suisse strengthened UBS Group AG’s U.S. investment banking operations, leading the bank to be in a better position to attract wealthy entrepreneurs and high-net-worth individuals for its private banking services.

The bank has opted to make changes in the senior leadership within its investment banking division to further solidify its competitive advantage. These adjustments come amid the departure of several senior executives. These changes in the leadership positions are aimed at reinforcing the bank’s commitment in key areas, including healthcare and leveraged finance, which are considered crucial for the company’s long-term growth prospects.

In sync with changes in the senior management, last week, UBS Wealth Management appointed Ryan Lurie, an Accredited Portfolio Management Advisor, to oversee its Arizona offices.

UBS Group AG’s Price Performance & Zacks Rank

Over the past six months, shares of UBS have gained 4.8% against the industry’s decline of 9.7%.

At present, UBS carries a Zacks Rank #3 (Hold).

Foreign Banks Worth Considering

Some better-ranked bank stocks are Erste Group Bank AG EBKDY and Grupo Financiero Galicia S.A. GGAL, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for EBKDY’s earnings has been revised 2.4% upward for 2024 over the past month. Shares of EBKDY have gained 8.5% over the past six months.

Earnings estimates for GGAL have been revised 8.4% upward over the past 30 days. In the past six months, GGAL shares have risen 57.6%.

Zacks Investment Research

Here are three stocks with buy rank and strong momentum characteristics for investors to consider today, November 12:

Grupo Financiero Galicia S.A. GGAL: This financial service holding company has a Zacks Rank #1 and witnessed the Zacks Consensus Estimate for its current year earnings increasing 8.4% over the last 60 days.

Grupo Financiero Galicia S.A. Price and Consensus

Grupo Financiero Galicia S.A. price-consensus-chart | Grupo Financiero Galicia S.A. Quote

Grupo Financiero Galicia's shares gained 59.7% over the last three months compared with the S&P 500’s advanced of 10.4%. The company possesses a Momentum Score of A.

Grupo Financiero Galicia S.A. Price

Grupo Financiero Galicia S.A. price | Grupo Financiero Galicia S.A. Quote

New Gold Inc. NGD: This gold mining company has a Zacks Rank #1 and witnessed the Zacks Consensus Estimate for its current year earnings increasing 30.8% over the last 60 days.

New Gold Inc. Price and Consensus

New Gold Inc. price-consensus-chart | New Gold Inc. Quote

New Gold's shares gained 36.0% over the last six months compared with the S&P 500’s advanced of 14.9%. The company possesses a Momentum Score of A.

New Gold Inc. Price

New Gold Inc. price | New Gold Inc. Quote

Bowhead Specialty Holdings Inc. BOW: This specialty property and casualty insurance products provider has a Zacks Rank #1 and witnessed the Zacks Consensus Estimate for its current year earnings increasing 1.5% over the last 60 days.

Bowhead Specialty Holdings Inc. Price and Consensus

Bowhead Specialty Holdings Inc. price-consensus-chart | Bowhead Specialty Holdings Inc. Quote

Bowhead Specialty's shares gained 23.6% over the last three months compared with the S&P 500’s advanced of 10.4%. The company possesses a Momentum Score of A.

Bowhead Specialty Holdings Inc. Price

Bowhead Specialty Holdings Inc. price | Bowhead Specialty Holdings Inc. Quote

See the full list of top ranked stocks here

Learn more about the Momentum score and how it is calculated here.

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