Last Update03 Oct 25Fair value Increased 3.10%
The analyst price target for Toronto-Dominion Bank has increased from $106 to approximately $109.29, as analysts cite improved confidence in the bank’s long-term growth strategy and recent positive updates from investor day presentations.
Analyst Commentary
Analysts have issued a series of price target increases for Toronto-Dominion Bank in recent weeks, reflecting heightened attention to the bank’s strategy and outlook following investor day updates. Their commentaries highlight both optimism about the bank’s future and a few lingering concerns for investors to consider.
Bullish Takeaways- Bullish analysts point to management’s renewed focus on deepening client relationships, improving operational simplicity, and maintaining discipline in cost and capital allocation. These factors are cited as drivers for long-term value creation and stronger execution.
- The outlook for medium-term earnings per share (EPS) growth remains robust, with estimated EPS growth in the 7% to 10% range and return on equity (ROE) targets around 16%. Upward revisions to earnings forecasts have been supported by better-than-expected buybacks and strong U.S. retail performance.
- Recent quarters have delivered solid results, including better-than-expected earnings, lower credit losses, and positive operating leverage. This suggests that management’s strategic initiatives are beginning to yield tangible benefits.
- Some bullish analysts believe consensus estimates for Canadian banks remain conservative, which creates room for the group, including Toronto-Dominion Bank, to potentially outperform market expectations through continued improvement in revenue and cost containment.
- Bearish analysts remain cautious on the shares and note persistent concerns around net interest income margins and the bank’s non-interest expense profile heading into fiscal year 2026.
- Some have cautioned that, despite management’s positive messaging, sector-wide risks such as mortgage renewal pressures and potential tariff impacts could weigh on future performance and growth trajectories.
- A few caution that recent investor day optimism, while encouraging, may still face challenges in execution, particularly in sustaining U.S. segment profitability relative to peers.
What's in the News
- TD Bank is actively seeking merger and acquisition opportunities, with leadership signaling selective M&A to accelerate growth while maintaining discipline in capital management. (Investor Day 2025)
- The bank will redeem all 8 million outstanding Series 9 Preferred Shares on October 31, 2025, totaling approximately $200 million, following regulatory approval. (Company Announcement)
- TD completed a notable share buyback by repurchasing 45.5 million shares for CAD 4.1 billion between February and July 2025. This represents 2.61% of shares outstanding. (Company Buyback Update)
- TD Bank finalized a strategic relationship with Fiserv. This partnership aims to enhance TD's merchant solutions in Canada and improve operational efficiency. (Company Announcement)
- TD issued ¥14,000 million in fixed rate subordinated notes through a private placement set to mature in 2035, further diversifying its capital structure. (Company Announcement)
Valuation Changes
- Consensus Analyst Price Target has risen slightly, increasing from CA$106 to approximately CA$109.29.
- Discount Rate has edged higher, up from 7.22% to 7.27%.
- Revenue Growth projections have improved modestly, with the estimated decline narrowing from -0.48% to -0.43% year over year.
- Net Profit Margin is nearly unchanged, moving marginally lower from 22.68% to 22.56%.
- Future P/E multiple has increased from 14.65x to 15.12x. This reflects slightly higher valuation expectations for the bank's shares.
Key Takeaways
- Fintech disruption and regulatory expenses are pressuring traditional revenue streams and profit margins, challenging the bank's mid-term growth expectations.
- Exposure to Canadian real estate and trade uncertainties heightens risk of credit losses and weakens confidence in lending and asset expansion strategies.
- Strong revenue growth, digital innovation, strategic restructuring, and diversified operations position TD for sustained profitability and shareholder returns in evolving financial markets.
Catalysts
About Toronto-Dominion Bank- Provides various financial products and services in Canada, the United States, and internationally.
- Expectations for TD's future revenue growth may be overstated due to headwinds from the accelerating shift to digital and non-traditional financial services competitors, which are eroding the market share and fee income of traditional banks as fintechs and large tech platforms capture more of the financial services value chain.
- Persistent investment in compliance (notably elevated AML remediation, cyber, and fraud prevention costs) is expected to drive higher structural expenses, weighing on net margins and overall earnings growth well into 2026 and 2027, as regulatory scrutiny and associated operational costs remain elevated.
- The bank's outlook may be overly optimistic regarding lending growth and asset expansion in the US due to regulatory asset caps and balance sheet restructuring programs, which are anticipated to limit loan growth and put downward pressure on net interest income through most of 2026.
- TD's overexposure to Canadian real estate and consumer lending heightens its sensitivity to a potential housing market correction, which could result in elevated credit losses, thereby increasing provisions and constraining EPS and return on equity in a slower-growth macroeconomic environment.
- Prolonged uncertainty and potential volatility related to international trade (e.g., USMCA/CUSMA renegotiation and tariff risks) are likely to dampen business and consumer confidence, reducing demand for loans and wealth management products-threatening topline growth assumptions embedded in the valuation.
Toronto-Dominion Bank Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming Toronto-Dominion Bank's revenue will decrease by 0.5% annually over the next 3 years.
- Analysts assume that profit margins will shrink from 32.0% today to 22.7% in 3 years time.
- Analysts expect earnings to reach CA$14.2 billion (and earnings per share of CA$8.73) by about September 2028, down from CA$20.3 billion today. However, there is some disagreement amongst the analysts with the more bullish ones expecting earnings as high as CA$16.4 billion.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 14.6x on those 2028 earnings, up from 8.7x today. This future PE is lower than the current PE for the US Banks industry at 14.7x.
- Analysts expect the number of shares outstanding to decline by 2.33% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 7.22%, as per the Simply Wall St company report.
Toronto-Dominion Bank Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- Consistent volume and fee-based revenue growth in Canadian Personal and Commercial Banking, Wealth Management, and U.S. segments-and record asset levels in multiple divisions-indicate ongoing demand for TD's core services, which could support top-line revenue expansion even in challenging environments.
- Robust execution in AI/digital initiatives (e.g., TD AI Prism, Virtual AI Assistant) and continued investment in digital/mobile banking position TD to benefit from the secular shift toward digital financial services, potentially increasing operational efficiency and net margins.
- Strategic restructuring-including exiting low-return portfolios, targeted asset sales, and focused cost reduction programs-is generating significant cost savings and improving the bank's return on equity and profitability, providing cushion for long-term earnings growth.
- Strong capital position, with a CET1 ratio at 14.8%, and completion of major share buybacks, enhances TD's ability to increase dividends or repurchase additional shares, which could underpin shareholder returns and support the share price.
- Growing capital markets and advisory franchise (bolstered by the Cowen acquisition) and diversified earnings mix (including resilient insurance and wholesale banking) strategically position TD to capture growth opportunities and achieve stronger profit margins as global financial conditions stabilize.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of CA$106.0 for Toronto-Dominion Bank based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of CA$120.0, and the most bearish reporting a price target of just CA$93.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be CA$62.5 billion, earnings will come to CA$14.2 billion, and it would be trading on a PE ratio of 14.6x, assuming you use a discount rate of 7.2%.
- Given the current share price of CA$103.33, the analyst price target of CA$106.0 is 2.5% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
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Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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