On Monday, RBC Capital Markets adjusted its price target for Canadian Western Bank (TSX:CWB:CN) (OTC: CBWBF), raising it significantly to C$51 from the previous C$28, while maintaining a "Sector Perform" rating. The revision comes in light of a proposed acquisition that RBC Capital deems beneficial for Canadian Western Bank's shareholders.
The adjustment reflects a new valuation based on the terms of the acquisition deal, which involves a 100% share consideration. RBC Capital has applied a fixed exchange ratio to arrive at the new price target, which they believe fairly represents the attractiveness of the acquisition price for shareholders of Canadian Western Bank.
The new price target of C$51 is derived from RBC Capital's valuation of the acquiring entity, which stands at C$113, with Canadian Western Bank's target being set at 0.45 times that figure. This calculation is based on the fixed exchange ratio outlined in the terms of the share-based transaction.
The "Sector Perform" rating suggests that RBC Capital views Canadian Western Bank as a stable investment, in line with the average sector performance. The substantial increase in the price target indicates a positive outlook on the bank's value following the proposed acquisition.
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