BMO enters the post-earnings stretch with shorts nearly gone, borrow costs at rock bottom, and the stock nudging a 52-week high — the question now is whether the valuation re-rating has further to run.
The positioning picture is as clean as it gets for a major bank. Short interest has collapsed 30% over the past month to just 0.88% of the free float, the lowest level in at least 90 days, after another leg down of nearly 15% this week alone. Borrow costs are negligible at 0.71% annualised, less than a third of where they were in late April when the rate briefly spiked above 10%. Availability is extraordinarily loose at over 7,600% — meaning the lending pool holds roughly 76 times the volume of shares currently borrowed. This is not a market making life difficult for bears; it is one that has almost entirely closed the short book.
The earnings beat drove the re-rating. Adjusted EPS of C$2.50 cleared the C$2.35 consensus, revenue of C$7.05 billion topped estimates by more than 6%, and management followed through with a 2% dividend hike to C$1.71 per quarter. The valuation has moved in response: the P/E multiple has expanded nearly one full turn over the past 30 days to around 14.9x, and price-to-book has climbed to 1.93x over the same period. Factor scores add texture — the dividend score ranks in the 85th percentile, EPS momentum over 90 days ranks 77th, and EPS surprise registers at the 67th percentile. The ORTEX short score, at 29.2, is drifting lower, consistent with a stock where bear conviction is fading rather than building.
Peers moved in the same direction this week, but BMO led the pack. TD gained 4.8% on the week, RY added 3.9%, and BNS rose 4.4%. BMO's 5.5% weekly advance outpaced all three. CM and NA lagged slightly at 3.5% and 2.6% respectively, suggesting some differentiation within the Canadian banking group — though the direction was uniform.
The analyst mean price target of C$211 now trails the stock price of C$223.64 by roughly 5-6%. That gap is worth watching. It does not signal imminent pressure, but it does mean the Street's published targets have not yet caught up with where the stock has moved. RBC Global Asset Management added over 2.2 million shares in the most recent reporting period, the largest active change among top holders, reinforcing institutional conviction even as the stock pushes toward and past prior consensus ceilings.
The next confirmed earnings event is set for August 25. Between now and then, the debate will centre on whether fee-driven revenue momentum can hold its pace as the Bank of Canada rate cycle continues to evolve — and whether analysts begin revising targets upward to close the gap with the current price.
See the live data behind this article on ORTEX.
Open BMO on ORTEX →ORTEX Market Intelligence content is generated by AI from a snapshot of ORTEX's proprietary data. Content is informational only and does not constitute investment advice.
