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.

Successful integration of acquisitions and digital investments are driving operational efficiencies, setting the stage for accelerated revenue and net margin growth.
Expanding wealth management and commercial lending, supported by strong market trends, are broadening revenue sources and strengthening overall financial stability.
Limited geographic diversification, ongoing technology investments, and mounting competitive and macroeconomic pressures threaten profitability, revenue expansion, and overall financial stability.

Catalysts

About National Bank of Canada

Provides financial services to individuals, businesses, institutional clients, and governments in Canada and internationally.What are the underlying business or industry changes driving this perspective?

Successful integration of Canadian Western Bank (CWB) and rapid realization of cost and funding synergies are progressing ahead of expectations, with revenue synergies yet to come-this positions the bank for accelerated revenue growth and improved net margins as integration milestones are completed over the next 18 months.
Strong organic balance sheet and commercial loan growth, especially in key markets like Quebec, is being driven by ongoing population growth and robust commercial activity, supporting higher net interest income and revenue expansion.
Investments in digital transformation and technology, alongside increasing client migration to digital channels, are expected to drive further operational efficiencies and process automation, resulting in future improvements to cost/income ratios and net margins.
Secular trends of infrastructure investment and supportive government economic policies are stimulating demand for credit and financial services, setting the stage for long-term deposit and lending growth, particularly in commercial and wealth management segments-positively impacting top-line revenue and earnings.
Continued momentum in wealth management and record fee-based income growth, combined with strong performance in key niches like M&A advisory and capital markets, indicate a broadening of revenue sources and greater earnings stability that should lift overall return on equity and help support a higher long-term valuation.

National Bank of Canada Earnings and Revenue Growth

National Bank of Canada Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming National Bank of Canada's revenue will grow by 10.3% annually over the next 3 years.
Analysts assume that profit margins will shrink from 31.1% today to 25.6% in 3 years time.
Analysts expect earnings to reach CA$4.2 billion (and earnings per share of CA$10.76) by about September 2028, up from CA$3.7 billion today. However, there is some disagreement amongst the analysts with the more bullish ones expecting earnings as high as CA$5.2 billion.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 21.1x on those 2028 earnings, up from 15.1x today. This future PE is greater than the current PE for the CA Banks industry at 14.7x.
Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 7.22%, as per the Simply Wall St company report.

National Bank of Canada Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

National Bank of Canada's continued concentration in Quebec and the current focus on integrating Canadian Western Bank (CWB) may limit geographic diversification, making it vulnerable to regional economic downturns and slowing national revenue growth.
Pressure on net interest margins (NIM) is expected to continue, with commentary indicating sequential NIM declines driven by asset and deposit mix, as well as lower deposit spreads; persistently low or volatile interest rates present a long-term risk to net interest income and overall profitability.
Rising technology and strategic investment costs are expected to persist as NA works to keep pace with digital transformation and fintech competition, potentially outpacing revenue growth and putting negative pressure on net margins.
The bank faces increased competitive pressure from non-bank and alternative lenders, especially in businesses like Credigy and traditional commercial lending, which could erode market share and cap revenue expansion, particularly if deal flow softens or regulatory changes enable further encroachment by non-bank players.
Growing uncertainty in the macroeconomic environment-including government deficits, inflation, tariff impacts, and the risk of higher provisions for credit losses, especially as impaired loans and allowances remain elevated-could put downward pressure on earnings, with risks heightened if unemployment rises or if housing markets in key regions stagnate or weaken.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of CA$148.462 for National Bank of Canada based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of CA$166.0, and the most bearish reporting a price target of just CA$113.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be CA$16.2 billion, earnings will come to CA$4.2 billion, and it would be trading on a PE ratio of 21.1x, assuming you use a discount rate of 7.2%.
Given the current share price of CA$144.56, the analyst price target of CA$148.46 is 2.6% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

Have other thoughts on National Bank of Canada?

Create your own narrative on this stock, and estimate its Fair Value using our Valuator tool.

Create Narrative

How well do narratives help inform your perspective?

Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

NA: Price Range Revisions And Margins Will Guide Share Performance Ahead