Canaccord Genuity Posts 432% Profit Growth in Q4, Beats Estimates; Shares Pop 2%

Shares of Canaccord Genuity (CF) gained more than 2% in early trading on Wednesday after the company reported record fourth-quarter and fiscal year 2021 earnings. The independent financial services firm offers brokerage and wealth management services.

Revenue came in at C$706.5 million for Q4 2021, an increase of 121% from Q4 2020. Analysts expected Canaccord to post revenue of C$554.33 million. The rise in revenue was mainly driven by investment banking revenue, which increased 529.3% in the quarter.

Furthermore, higher activity and volume in equity markets have been a tailwind for Canaccord’s other lines of business. Principal trading revenue increased 97.8% to C$75.3 million, while global wealth management revenue soared 44.4% to C$199.2 million.

Meanwhile, net income for the quarter ended March 31, 2021, jumped 432% to C$139.4 million. On a per-share basis, the financial firm posted earnings of C$0.93, higher than the consensus estimate of C$0.62.

Canaccord’s President and CEO Dan Daviau said, “The financial performance that we achieved in our fourth quarter and fiscal year clearly demonstrates that we are operating at a stronger level than any period in our history, and that is a testament to the power of our global platform and the incredible efforts put forth by our employees across the organization. While we anticipate that activity levels in our core midmarket focus areas could moderate in the coming quarters, we are pleased to be starting fiscal 2022 with an even stronger wealth management franchise, expanded market share in our core sectors and geographies, and compelling prospects for expanding our product capabilities.”

Canaccord also said it was withdrawing its offer to buy wealth management firm RF Capital after RF’s Board of Directors refused to enter into productive discussions. (See Canaccord Genuity stock analysis on TipRanks)

Three months ago, TD Securities analyst Graham Ryding kept a Buy rating on CF while raising its price target to C$16.00 from C$15.00 (19% upside potential).

Ryding is the only analyst to have offered a rating for CF in the past three months. Shares have gained approximately 20% year-to-date.

TipRanks’ Smart Score

CF scores a 4 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock returns are likely to be in line with the overall market.

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