NA: Shares Will Likely Be Supported By Rising Dividend And Earnings Visibility

National Bank of Canada’s fair value estimate has been raised from approximately C$155 to about C$168, as analysts cite a series of upward price target revisions and improving longer term earnings visibility, despite slightly more conservative assumptions for growth and margins.

Analyst Commentary

Recent Street research reflects a broadly constructive stance on National Bank of Canada, with several bullish analysts lifting their price targets into the mid to high C$160s and one firm moving to a more positive recommendation. At the same time, some commentators emphasize execution risks as the bank pursues growth beyond its core Quebec franchise.

Bullish Takeaways

• Bullish analysts point to a series of upward price target revisions into the C$160 to C$168 range, arguing that improving earnings visibility supports a higher fair value multiple.
• The recent upgrade to a Buy rating, alongside higher targets, reflects a view that the bank can sustain attractive returns on equity as credit quality remains manageable and fee income expands.
• Positive views emphasize disciplined capital deployment and the potential for operating leverage as the bank scales nationally, which could support both margin stability and earnings growth.
• Supportive analysts highlight that even after the target increases, the shares still trade at a modest discount to their updated fair value estimates, leaving room for further upside if execution remains solid.

Bearish Takeaways

• More cautious analysts maintain neutral or Hold stances, noting that rebuilding ROE toward the bank’s 15 to 20 percent medium term objective may be challenging as it pushes further outside Quebec.
• There are concerns that expanding into markets where competitive advantages are less established could pressure acquisition costs, compress margins, and delay the realization of scale benefits.
• Some see the recent rally and higher targets as already discounting a constructive macro and credit backdrop, which could limit upside if loan growth normalizes or credit costs rise faster than expected.
• Evidence of intensifying competition in new regions, particularly in retail and commercial banking, is viewed as a potential headwind to both pricing power and long term growth assumptions embedded in current valuations.

What's in the News

• Announced a higher quarterly dividend of CAD 1.24 per share, payable February 1, 2026, with an ex dividend and record date of December 29, 2025 (company announcement).
• Recorded impairment losses of CAD 62 million on intangible assets in the fourth quarter ended October 31, 2025, reflecting a reassessment of certain business values (company filing).
• Plans to redeem all 500,000 Series 44 NVCC First Preferred Shares in connection with the redemption of the Series 1 LRCNs, as part of ongoing regulatory capital management approved by OSFI (company announcement).

Valuation Changes

• Fair Value Estimate has risen moderately from approximately CA$155 to about CA$168, reflecting higher long term earnings visibility and a richer valuation multiple.
• Discount Rate has edged down slightly from about 7.26 percent to roughly 7.26 percent, a negligible change that modestly supports higher present value estimates.
• Revenue Growth Assumption has fallen meaningfully from around 10.21 percent to about 8.68 percent, indicating a more conservative outlook for top line expansion.
• Net Profit Margin has declined slightly from roughly 26.24 percent to about 25.17 percent, incorporating some pressure on profitability in the updated model.
• Future P/E Multiple has increased from approximately 21.66x to about 24.13x, signaling a higher expected valuation relative to forward earnings despite more cautious growth assumptions.