On September 6, 2024, CIBC World Markets (Analyst Rank #14) issued a research report and revised its 12 month target price for Toronto Dominion Bank (TD) to CAD 100, up from CAD 88. This valuation upgrade reflects a more optimistic view of TD Bank’s future performance, signaling confidence in the bank’s potential to outperform its previous valuation. The “Outperform” rating suggests that CIBC expects TD Bank’s stock to perform better than the market or its peers.

Analyst Consensus and Forecast

The average target price for Toronto Dominion Bank, according to forecasts from 14 analysts, is CAD 84.13 over the next 12 months. This average target suggests a moderate growth potential from the current stock price, indicating that analysts generally expect some appreciation but not as much as CIBC’s revised target suggests.

Stock Target Advisor’s Analysis

Stock Target Advisor’s assessment of Toronto Dominion Bank presents a more cautious view, describing the stock as “Bearish.” This analysis is based on 2 positive signals and 6 negative signals, highlighting a range of concerns about the stock’s performance. Key points from the analysis include:

Positive Fundamentals

1. High Market Capitalization: TD Bank is among the largest in its sector, indicating stability and strong financial health.
2. Superior Dividend Growth: The bank has demonstrated top quartile dividend growth over the past five years, appealing to income-focused investors.

Negative Fundamentals

1. Poor Return on Assets (ROA): TD Bank has underperformed compared to peers in utilizing its assets to generate earnings.
2. Overpriced Compared to Earnings: The stock is trading at a higher valuation relative to earnings, suggesting potential overvaluation.
3. Negative Cash Flow: The bank has reported negative cash flow in recent quarters, raising concerns about liquidity.
4. Poor Return on Equity (ROE): The bank’s ROE is below median, indicating less effective use of shareholders’ equity.
5. Low Revenue and Earnings Growth: TD Bank has shown below-median growth in both revenue and earnings over the past five years, reflecting slower business expansion and profitability.

At the last closing, Toronto Dominion Bank’s stock price stood at CAD 81.77. The stock has experienced modest changes:

• +2.00% over the past week
• +3.97% over the past month
• +0.02% over the last year

These figures indicate some recent improvements but relatively stable performance over the longer term.

Outlook

TD Bank’s stock is currently receiving mixed signals from analysts. While CIBC World Markets has increased its target price to CAD 100 and assigned an “Outperform” rating, reflecting a bullish outlook, Stock Target Advisor’s analysis remains bearish, highlighting several negative indicators despite some recent positive movements. Investors should carefully consider both the optimistic target set by CIBC and the cautious signals from other analyses when making investment decisions regarding TD Bank.