The Toronto-based bank majorly operates through its Canadian Retail, U.S. Retail Bank, and Wholesale Banking segments.
New York-based Cowen provides alternative investment management, investment banking, equity and credit research, prime brokerage, sales, and trading services.
According to a report by The Wall Street Journal, the acquisition deal, valuing more than $1 billion, is expected to be announced on August 2. The deal can involve TD paying $39 per share for the U.S. boutique investment bank and brokerage, which closed at $35.49 on August 1. Following the news, Cowen jumped 9% to $38.70 during Monday’s extended trading hours.
The acquisition is expected to broaden Toronto-Dominion Bank’s presence in the United States and boost its investment banking services. The move seems to be strategically sound as the U.S. Investment Banking & Securities Dealing market, valuing around $182.5 billion, is expected to grow around 17.6% in 2022, according to an IBISWorld report.
In a bid to widen its footprint in the United States, TD entered into a definitive agreement to acquire First Horizon in an all-cash deal valued at $13.4 billion in February 2022. Subject to customary closing conditions, the deal is expected to close in the first quarter of fiscal 2023. The buyout is expected to expand TD’s presence in the new markets of Louisiana, Tennessee, Texas, and Georgia.
Meanwhile, the Totonto-based bank has decreased its stake in The Charles Schwab Corporation to 12% from approximately 13.4% by selling 28.4 million shares of non-voting common stock of Schwab.
TD Stock Carries a Hold Consensus Rating
Overall, the Street has a Hold consensus rating on the stock, which is based on one Buy, 10 Holds, and one Sell. TD’s average price forecast of C$99.90 signals that the stock may surge nearly 20.1% from current levels. Shares of the company have declined 13.8% so far this year.
TipRanks data shows that financial bloggers are 100% Bullish on TD, compared to the sector average of 67%. Meanwhile, hedge funds are Very Negative about the stock, as they sold 125,500 TD shares over the last quarter.
Is TD Stock Worth Your Time & Money?
The Cowen deal is expected to strengthen the investment banking unit of TD and expand its presence in the highly lucrative U.S. Investment Banking & Securities Dealing market. Further, this leading financial services provider has already been witnessing strong revenue growth across its businesses. Considering the strong underlying fundamentals of the bank, investors can consider this stock to enjoy handsome returns in the long term.
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