TD Cowen has upgraded Bank of Montreal (BMO) from a Hold rating to Buy, and simultaneously lifted its price target to C$209 from C$184. The research note points to management’s stated objective of achieving a 15% return on equity (ROE) by the end of 2027 as a central reason for the improved stance.
At the time of the update, BMO shares were trading at $138.02 USD. The stock has produced strong market returns recently, delivering a 43.51% gain over the past year and advancing 24.22% in the last six months.
TD Cowen characterizes the 15% ROE target as a positive signal. The bank’s most recent reported ROE sits at 10%, while InvestingPro’s Fair Value assessment suggests the shares are trading below intrinsic value. TD Cowen’s model projects a 300 basis-point rise in BMO’s ROE over the coming two years, a pace that would exceed the research firm’s peer-group forecast by about 150 basis points.
The firm attributes the expected improvement to several factors concentrated in BMO’s U.S. operations: an uplift in U.S. net interest margin, continued U.S. loan growth, management of provisions for credit losses, and ongoing share buybacks. Those items form the backbone of TD Cowen’s bullish case and underpin the revised earnings trajectory.
Reflecting its updated outlook, TD Cowen raised its 2027 earnings estimates for BMO by roughly 9%. Even with the higher forecasts, the analyst kept a target price-to-earnings multiple that implies the stock would still trade at a discount to the broader banking group.
Historical context in the note highlights that BMO had narrowed its ROE gap with peers to about 60-80 basis points in 2021 and 2022. That relative improvement weakened following the Bank of the West acquisition completed in early 2023. The acquisition sequence contributed to an 11.3% ROE in 2025, a level nearly 300 basis points below competitors, according to the firm’s analysis.
This coverage centers on TD Cowen’s assessment and projections. The outlook rests on the bank reaching targets for U.S. margins, loan growth, and capital actions that together would materially narrow the ROE gap versus peers.