Analysts Adjust National Bank of Canada Price Targets Amid Improved Margins and Cautious Sector Outlook

National Bank of Canada's fair value estimate has been raised from C$148.46 to C$151.69. Analysts cite a combination of slightly improved profit margin outlook and upward revisions to price targets across the Street.

Analyst Commentary

Recent analyst research reflects a mixture of optimism and caution on National Bank of Canada’s outlook. While several price targets have been revised upward, indicating improved sentiment, there remain considerations regarding the bank’s valuation and sector performance.

Bullish Takeaways

• Bullish analysts have raised their price targets, reflecting confidence in stronger profit margins and better growth prospects for the bank.
• Some believe that consensus estimates for Canadian banks remain on the conservative side. This suggests potential for earnings to surprise to the upside.
• The maintenance of favorable ratings alongside target increases points toward resilience in the bank’s core operations and overall strategy.
• Upward revisions in price targets are seen as a signal that the bank is well-positioned to capitalize on sector tailwinds and deliver solid execution.

Bearish Takeaways

• Bearish analysts have adjusted their price targets downward in some cases, emphasizing persistent sector uncertainties and the potential for near-term volatility.
• Some analysts maintain more neutral or cautious ratings, citing the need for further sustained improvements in key financial metrics before turning more positive.
• The competitive landscape and macroeconomic risks remain factors. Some are highlighting concerns over the pace of growth relative to peers.
• There are ongoing questions about whether current valuation levels fully account for upcoming challenges in the broader Canadian banking environment.

What's in the News

• National Bank of Canada will redeem all 500,000 Series 44 Preferred Shares as part of the redemption of the Series 1 LRCNs. Payment to holders will be made on the next business day following November 15, 2025. This move is part of ongoing regulatory capital management and is approved by the Office of the Superintendent of Financial Institutions. (Key Developments)
• The Board of Directors authorized a buyback plan on August 27, 2025. (Key Developments)
• National Bank of Canada announced a normal course issuer bid to repurchase up to 8,000,000 common shares, representing 2.04% of outstanding share capital. The buyback is subject to regulatory approval and will terminate no later than September 24, 2026. All repurchased shares will be cancelled. (Key Developments)

Valuation Changes

• Fair Value Estimate has risen slightly from CA$148.46 to CA$151.69, reflecting a modest upgrade.
• Discount Rate increased from 7.22% to 7.28%, which suggests a slightly higher required return for investors.
• Revenue Growth forecast has eased from 10.34% to 10.08%, indicating a marginally lower growth outlook.
• Net Profit Margin has improved from 25.65% to 26.57%, which highlights expectations of stronger profitability.
• Future P/E Ratio decreased marginally from 21.14x to 21.03x, which implies a slight improvement in expected valuation efficiency.