UBS raises Bank of Nova Scotia stock price target to C$94 on earnings beat

Bank of Nova Scotia (BNS) reported a strong Q3 earnings beat, with EPS of $1.88 surpassing the $1.73 forecast and revenue reaching $9.49 billion against an anticipated $9.3 billion, primarily driven by lower provision expenses and robust pre-tax pre-provision income across its core segments. In response, UBS raised its price target for BNS to C$94.00 from C$88.00, maintaining a Buy rating, and increased its 2025 and 2026 EPS forecasts, citing improved consumer credit trends and higher revenue projections from capital markets and wealth management. Despite trading near its 52-week high, the stock is still considered slightly undervalued by some analyses.

Analysis

Bank of Nova Scotia (BNS) delivered a strong third-quarter performance, exceeding analyst expectations on both top and bottom lines. The bank reported an earnings per share of $1.88, an 8.67% surprise above the $1.73 forecast, while revenue came in at $9.49 billion against a $9.3 billion projection. This outperformance was driven by a combination of lower-than-anticipated provision expenses and robust pre-tax pre-provision (PTPP) income growth across its Global Banking and Markets, International Banking, and Canadian Banking divisions. In response to these results, UBS reiterated its Buy rating and raised its price target on the stock to C$94.00 from C$88.00. The analyst firm also increased its 2025 and 2026 EPS forecasts, citing an improved outlook for consumer credit trends which lowers expected credit costs, alongside upwardly revised revenue forecasts due to strength in the capital markets and wealth management segments. Despite trading near its 52-week high, the article notes that some valuation analyses suggest the stock remains slightly undervalued.

Key Decisions for Investors

• The combination of a significant earnings beat, a positive analyst price target revision, and upwardly revised forward EPS estimates provides a solid basis for a bullish stance on Bank of Nova Scotia.
• Investors should monitor the bank's subsequent reports for continued strength in non-interest income from its capital markets and wealth management arms, as these are key drivers behind the upgraded analyst outlook.
• Given that the stock is trading near its 52-week high but is still cited as potentially undervalued, the recent positive results and revised guidance may not be fully priced in, suggesting a potential opportunity for accumulation.