Bank of Montreal (BMO.TO) was upgraded to Buy from Hold at TD Securities on Wednesday.

Analyst Mario Mendonca raised his price target on shares of the Canadian bank to $209 from $184.

"We view BMO's new time stamp (exit '27 at 15%) on ROE gains very favourably," Mendonca said in a note to clients.

"Focusing on BMO-specific drivers (US NIM, US loan growth, PCLs, and buybacks), we now expect BMO's ROE to climb 300bps higher over the next 2 years (below the target), outpacing the group by 150bps," the analyst said.

"We can construct a highly bullish macro picture, reflecting strong capital markets, buoyant 5-year bond yield (supports NIM expansion), robust loan growth, and strong equity markets (supporting WM); that would comfortably lead BMO to a 15% ROE," Mendonca said.

"The problem with this outlook is that it is somewhat improbable, and it would support all banks, leaving BMO's ROE disadvantage perhaps only slightly lower than it is today."

(MT Newswires covers equity, commodity and economic research from major banks and research firms in North America, Asia and Europe. Research providers may contact us here: https://www.mtnewswires.com/contact-us)