UPDATE: Credit Suisse Positive on Canadian Banks; Downgrades CIBC (CM), Upgrades BMO (BMO)

(Updated - December 12, 2014 11:12 AM EST)

Credit Suisse upgraded Canadian banks. CIBC (NYSE: CM) was downgraded from Neutral to Underperform, but BMO (NYSE: BMO) was upgraded to Outperform from Neutral with a price target of $93. Analyst Kevin R. Choquette made note of recent weakness in the space, which may relate to short interest.

"We are net upgrading Canadian banks due to the 10% share price retreat from 52-week highs which we believe is mainly on macro issues and perhaps short interest. We expect the resilient Canadian bank models to weather the potential economic slowdown and continue to generate a lot of capital and valuations are compelling," said Choquette.

"It is generally felt that Ontario and Quebec will benefit from lower energy prices and weaker CAD at the expense of Western Canada, mainly Alberta," continued the analyst. "TD (NYSE: TD), BMO and RY (NYSE: RY) are the banks with the largest USD exposure and now are all Outperforms. CIBC has the most domestic and retail exposure of any Canadian bank, has the highest concentration in residential mortgages, is transitioning its retail bank, and has higher reinvestment and operating leverage pressures."

"We are upgrading BMO to Outperform from Neutral based on recent share price correction, its USD exposure and leverage to the U.S. recovery, and our increased comfort level with BMO Capital Markets strategy, particularly its measured U.S. build out," he added.

For an analyst ratings summary and ratings history on CIBC click here. For more ratings news on CIBC click here.

Shares of CIBC closed at $86.64 yesterday.

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