Barlow’s Research Roundup: Last minute bank earnings preview and top picks from a BMO analyst

Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow

Boring bank quarter

BMO bank analyst Sohrab Movahedi prepared clients for the sector’s earnings season which kicked off Tuesday with Bank of Nova Scotia results,

“Q1/26 earnings kicks off [Tuesday] with BNS, and it is unlikely to be a major inflection point. We expect last year’s earnings drivers of NIM expansion and fee-revenue growth (benefits of an upward sloping yield curve), and positive operating leverage (with focus on efficiency) to offset muted loan growth, and still-elevated PCLs to endure. This, and continued buybacks, should yield year-over-year cash operating EPS growth of 8 per cent (higher at BNS, TD, and CM; lower at RY and NA). While the current forward P/E valuation multiple of 13.0 times on the bank index has pierced the upper end of its typical historical range, the prospects of above medium-term target EPS growth and continued ROE improvements keep us constructive on the banks; downside risk remains a Canadian economic recession and continued sluggish loan growth environment from unresolved trade uncertainty. Our Outperform-rated names remain RY, TD, NA, CM, and EQB”

Canada’s effective tax rate

BofA Securities economist Carlos Capistran estimates the new U.S. tariff levels for Canada, Mexico and Brazil,

SCOTUS struck down most Trump‑era IEEPA tariffs, including reciprocal and fentanyl measures. In response, President Trump imposed a global Section 122 tariff at 15 per cent and announced new Section 232 and 301 investigations. We estimate the U.S. effective tariff has fallen to 11.6 per cent, which could fall below 10 per cent when measured using revenues. Brazil, Canada & Mexico emerge as relative beneficiaries Brazil gains the most, with its pre‑SCOTUS 40-per-cent tariff replaced by the 15-per-cent rate —a 7pp drop in its effective tariff to 17 per cent. Canada and Mexico also benefit, as goods compliant with USMCA are exempt, lowering their effective tariffs to 2 per cent and 4 per cent. Other beneficiaries include Venezuela (oil exempt, already at 15 per cent), El Salvador, Guatemala, and Ecuador, whose recent bilateral deals shield large portions of their exports”.

Copper miners expensive, attractive

Scotiabank analyst Orest Wowkodaw believes copper miners are still attractive despite recent gains,

“We estimate that the miners are now trading at an average implied Cu price of $6.48/lb; while this represents a new record high, we note that the average premium of 12 per cent to spot of $5.78/lb appears very reasonable compared with historical levels. The 12-per-cent premium has strengthened from 7 per cent at the beginning of the month and from only 3 per cent at the start of the year. However, in 2025, the miners traded at an average premium to spot of 15 per cent, including a peak of 26 per cent in January and a trough of 7 per cent in April following “Liberation Day”. The current 12 per cent premium to spot remains well below the three-year average of 19 per cent, but is now modestly above the long-term average (since 2018) of 10 per cent. IVN ($4.96/lb), ERO ($5.64/lb), CS ($5.78/lb), FOM ($5.95/lb), FM ($5.99/lb), and TECK ($6.15/lb) are the least expensive; conversely, ANTO ($9.08/lb), SCCO ($7.99/lb), LUN ($6.80/lb), FCX ($6.79/lb), HBM ($6.52/lb), and GMEXICO ($6.16/lb) are the most expensive. Among the larger miners, FM and IVN appear the most undervalued on a relative basis by a wide margin (IVN’s implied Cu valuation benefits from a meaningful contribution from elevated PGE prices at Platreef in our analysis), while ANTO and SCCO appear the most overvalued by far (we rate both companies SU;[ sector underperform]we prefer FCX and LUN for quality). We highlight that CS, ERO, and IVN (the three least expensive names) all released relatively disappointing guidance updates.”

Mr. Wowkodaw’s sector outperform rated stocks include First Quantum, Ivanhoe Mines, Capstone Mining, Hubby Minerals and Ero Copper.

Bluesky post of the day

Diversion

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