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BMO’s Belski Sees Canada Profit Melting Before Big Stock Bounce


By Divya Balji

(Bloomberg) —One of Canada’s staunchest bulls is cutting his profit forecast for the country’s S&P/TSX Composite Index by 10% but is keeping his year-end target in place — at more than 5,000 points higher from here.

Brian Belski, chief investment strategist at Bank of Montreal, cut his earnings per share target to a “bear-case scenario” level as the oil price shock and a coronavirus lead to mounting concerns about a recession.

“While we continue to believe the economy, markets and earnings will recover from the shock of the coronavirus (Covid-19 virus), there is no denying the fundamental impact of lower oil prices on the overall Canadian earnings environment,” Belski said

The bank cut its 2020 earnings target to C$1,020 from C$1,140, said chief investment strategist, Brian Belski in a report published Monday.

Belski isn’t revising his target on the S&P/TSX level, which sits at 18,200. The benchmark index fell 8.4% as of 3:25 p.m. in Toronto on Monday to 12,570.14. Belski upgraded real estate stocks to overweight from market weight, maintains energy and financials at overweight.

“While investments, let alone society, have been gripped by the fear of the lasting effects of Covid-19 virus, we firmly believe this too shall pass and remain committed to perspective and analytically driven messaging as opposed to fear-laden headlines and the natural impulse to react,” Belski said.

Canadian stocks entered a bear market last week and are now down about 30% since their peak in February.

The BMO strategist has had a knack for nailing year-end forecasts for Canadian stocks. Last year, he predicted the benchmark would end the year at 17,000, about 63 points from where it actually ended. His forecast for the S&P/TSX in 2017 was only 1%, or about 200 points below the final closing number. Belski’s 2016 forecast was even more spot on, coming within just 12 points, or 0.1%, of the close.

In 2018, his estimate was off by a wide margin as Canadian stocks careened toward their biggest annual plunge since the 2008 financial crisis, ending the year more than 3,000 points, or 22%, below his forecast.



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