Toronto Dominion Bank (TD:CA) (TD)
Toronto Dominion Bank (TD), one of Canada’s largest financial institutions, plays a crucial role in the banking and financial services landscape. Recently, Morningstar (Rank#53) has maintained its “Buy” rating for TD, setting a target price of CAD 88. This endorsement reflects confidence in TD’s long-term growth potential and operational stability, particularly in the face of evolving market conditions.
Analyst Outlook:
According to the consensus from 15 analysts, the average target price for TD over the next 12 months is CAD 85.21. This figure indicates a moderate upside potential from the current trading levels. The majority rating of “Buy” among analysts suggests a generally optimistic outlook for the bank’s performance, driven by factors such as strong financial fundamentals, a diversified revenue base, and robust capital management.
Stock Target Advisor Analysis:
Despite the optimistic analyst ratings, Stock Target Advisor’s assessment of TD is classified as “Bearish.” This analysis is based on 2 positive signals versus 7 negative signals, highlighting a cautious sentiment regarding the bank’s near-term performance.
Positive Signals:
High Market Capitalization: The company is one of the largest in its sector, indicating stability as it falls in the top quartile.
High Gross Profit to Asset Ratio: It ranks in the top quartile for this ratio, suggesting potential for superior long-term returns, appealing to value investors.
Negative Signals:
- Poor Capital Utilization: Recent returns on invested capital are below the median compared to peers.
- Poor Return on Assets: The company’s return on assets has also been below median in the last four quarters.
- Overpriced Compared to Earnings: The stock trades at a high price-to-earnings ratio, exceeding sector medians.
- High Volatility: Total returns have been more volatile than median levels in the sector over the past five years, indicating higher risk.
- Negative Cash Flow: The company reported negative total cash flow in the latest four quarters.
- Poor Return on Equity: Recent returns on equity are below median compared to peers.
- Low Earnings Growth: The stock has demonstrated below median earnings growth over the past five years relative to its sector.
Recent Performance Metrics:
As of the last closing, TD’s stock price was CAD 78.48. This price reflects a notable decline, with changes of -9.28% over the past week, -7.17% over the past month.
Outlook:
Morningstar’s “Buy” rating and a target price of CAD 88 reflect positive long-term prospects for Toronto Dominion Bank. The current bearish signals and recent stock performance warrant a careful approach for investors. The mixed sentiment highlights the importance of closely monitoring economic indicators and market conditions that could impact TD’s financial performance moving forward.
STA Research is a independent Investment Research company that specializes in stock forecasting and analysis with integrated AI.
