Canaccord Raises Price Target for Royal Bank of Canada to $219, Maintains Buy Rating

Canaccord has increased its price target for Royal Bank of Canada to C$219, up from C$201, while maintaining a Buy rating. The bank's strong financial health is reflected in its revenue growth, net margin, and EPS. However, warning signs include a high debt-to-equity ratio and insider selling activity. Despite this, RBC's diversified service offerings, strong market position, and strategic focus on expansion support its long-term growth prospects.

Royal Bank of Canada (RY) reported strong third-quarter 2025 earnings, exceeding analyst expectations and prompting Canaccord Genuity to raise its price target to C$219 from C$201, while maintaining a "Buy" rating. The bank's adjusted diluted earnings per share (EPS) of $3.84 surpassed the forecast of $3.32, while revenue increased by 16.1% year-over-year to $16.99 billion [1].

The bank's stock price rose by 6.36% to $146.43 in pre-market trading following the announcement. RBC's performance was driven by a diversified business model that includes banking, wealth management, and capital markets. The bank's return on equity (ROE) stood at 17.7% for the quarter, reflecting strong profitability. Additionally, the bank's capital generation, measured by the CET1 ratio, was 13.2%, indicating robust financial health [1].

Analysts are optimistic about the bank's prospects, with a "Buy" recommendation on RY and an average one-year price target of $143.52. This suggests a potential 4.24% upside from the current trading price, indicating investor confidence in the bank's financial health and growth prospects [1].

Looking ahead, RBC is targeting a return on equity of at least 16% in fiscal 2026, building on its current ROE of 15%. The bank expects mid-teens growth in net interest income and mid to high single-digit expense growth. RBC remains focused on organic growth and potential strategic acquisitions, while closely monitoring trade negotiations and economic conditions [1].

However, RBC's high debt-to-equity ratio and recent insider selling activity pose potential risks. The bank's debt-to-equity ratio was 1.07, higher than its peers, and insider selling activity has been observed in the past few quarters [2]. Despite these concerns, RBC's diversified service offerings, strong market position, and strategic focus on expansion support its long-term growth prospects.

References:
[1] https://www.ainvest.com/news/royal-bank-canada-ry-q3-earnings-surpass-expectations-analysts-predict-upside-potential-2508/
[2] https://finance.yahoo.com/news/royal-bank-canada-ry-q3-070313598.html