Why The Narrative Around Royal Bank of Canada Is Shifting After Analyst Upgrades And New Targets

Simply Wall St

Thu, December 11, 2025 at 10:16 AM EST

Royal Bank of Canada’s fair value estimate has nudged higher to C$228.60 from about C$219.27, driven by slightly stronger earnings expectations and a somewhat more upbeat view on future revenue growth. At the same time, a marginally lower discount rate of roughly 7.25% versus 7.26% underscores how recent analyst upgrades and higher targets in the low C$220s to low C$230s have reinforced confidence in the bank’s medium term outlook. Read on to see what is driving this evolving narrative and how you can stay on top of future shifts in market expectations.

What Wall Street Has Been Saying

🐂 Bullish Takeaways

• Analysts have turned more constructive on Royal Bank of Canada, with ratings moving toward Outperform and Buy as firms see the bank as relatively well positioned on profitability and risk.
• Raymond James initiated coverage at Outperform with a C$229 target, citing leading ROE, unmatched scale, strong management and a diversified business mix that leaves the bank less exposed to a worsening credit cycle.
• National Bank upgraded the shares to Outperform from Sector Perform with a C$231 target, while Canaccord and Scotiabank lifted their targets to C$224 and C$218 respectively, reinforcing confidence in execution, earnings resilience and medium term growth.
• Upgrades from Erste Group to Buy and higher targets across several firms support the view that recent performance, cost discipline and balance sheet quality justify a valuation closer to the low C$220s to low C$230s range.

🐻 Bearish Takeaways

• Despite the recent wave of upgrades and target hikes, the clustering of price targets near the current fair value suggests some analysts see a more limited upside, with valuation and the potential for credit cycle deterioration remaining key watchpoints.

TSX:RY 1-Year Stock Price Chart

What’s in the News

• Royal Bank of Canada is serving as a financial adviser alongside Goldman Sachs and JPMorgan on EQT AB’s potential U.S. IPO of waste management company Reworld, a deal that could raise at least $1 billion and may launch as early as next year. This underscores RBC’s role in large scale U.S. capital markets transactions.
• RBC plans to redeem all outstanding NVCC Non Cumulative 5 Year Fixed Rate Reset First Preferred Shares, Series BR, on January 24, 2026. This will automatically trigger the redemption of $1.25 billion of associated Series 2 Limited Recourse Capital Notes, with both redemptions to be funded from general corporate funds.
• The bank continues to return capital to shareholders. It has repurchased 7,171,000 shares, or 0.51% of shares outstanding, for C$1,398 million under its current buyback program as of October 31, 2025.
• RBC is reported to be the leading candidate to acquire UK wealth manager Evelyn Partners in a potential multibillion pound transaction. This move would further expand its European wealth management presence following the 2022 acquisition of Brewin Dolphin.

How This Changes the Fair Value For Royal Bank of Canada

• Fair Value Estimate has risen slightly to C$228.60 from about C$219.27, reflecting modestly stronger earnings expectations.
• Discount Rate has edged down marginally to about 7.25% from roughly 7.26%, which is a negligible change in the cost of equity assumption.
• Revenue Growth has increased moderately to about 5.3% from around 4.6%, indicating a somewhat more optimistic outlook for top line expansion.
• Net Profit Margin has risen slightly to roughly 31.6% from about 30.2%, suggesting incremental improvement in profitability assumptions.
• Future P/E multiple has fallen modestly to about 16.7x from roughly 17.9x, implying a lower valuation multiple applied to higher expected earnings.

Original:

https://finance.yahoo.com/news/why-narrative-around-royal-bank-151634134.html?fr=sycsrp_catchall