Piper Sandler has kept its Neutral rating and $52.00 price target on Comerica Incorporated (NYSE: NYSE:CMA) as the firm noted the recent volatility in sentiment towards the bank, highlighting Comerica's weaker outlook post-second-quarter earnings and the loss of its Direct Express relationship, which provided low-cost funding.
Analysts had anticipated the stock to merely stabilize without significant gains.
Despite these challenges, potential rate cuts expected sooner than previously forecasted could benefit Comerica's liability-sensitive balance sheet. Additionally, merger and acquisition discussions in the banking sector, spurred by KeyCorp (NYSE:KEY)'s sale of a minority stake to a Canadian bank, could introduce a support factor for banks the size of Comerica.
Comerica's loan growth ambitions are seen as particularly aggressive, and while net interest income (NII) is expected to continue contracting through the third quarter of 2024, the mid-quarter update will be crucial. Investors are keen on updates regarding NII and loan growth.
In other recent news, Comerica Incorporated has seen several adjustments in its financial projections due to recent developments. Compass Point maintained a Buy rating on Comerica but reduced its price target to $56.00, reflecting revised earnings per share (EPS) estimates for fiscal years 2024 and 2025.
Keefe, Bruyette & Woods, Piper Sandler, and Baird also adjusted their price targets for Comerica, mainly due to recalibrated future EPS expectations and the potential loss of the Direct Express relationship.
RBC Capital maintained an Outperform rating on Comerica's shares but lowered its price target to $56 from $58, citing a decrease in noninterest-bearing deposits and net interest income.
Truist Securities downgraded Comerica's stock from Buy to Hold, adjusting the price target to $53 due to a less favorable outlook for the company's net interest income and fee income for 2025, along with lower loan growth expectations. DA Davidson maintained a Neutral rating with a consistent price target of $55.00.
InvestingPro Insights
As Comerica Incorporated (NYSE:CMA) navigates a period of volatility and strategic shifts, real-time data from InvestingPro provides a snapshot of the company's financial health. With a market capitalization of $7.56 billion and a P/E ratio of 12.48, the bank stands at a crossroads. Adjusted revenue data from the last twelve months as of Q2 2024 indicates a decline of 14.47%, reflecting some of the challenges highlighted by Piper Sandler.
InvestingPro Tips offer additional context: while 16 analysts have revised their earnings expectations downwards for the upcoming period, Comerica has maintained dividend payments for an impressive 54 consecutive years. This commitment to returning value to shareholders is noteworthy, especially when considering the bank's strong return over the last three months, with a 16.75% total price return. Additionally, analysts remain optimistic about Comerica's profitability, predicting the company will stay in the black this year.
Investors considering Comerica's prospects may find these insights particularly relevant, especially when juxtaposed with the bank's ambitious loan growth plans and the potential impact of interest rate fluctuations. For those looking for more detailed analysis, InvestingPro offers a wealth of additional tips to help inform investment decisions.
The InvestingPro platform lists several more tips for Comerica, which can be accessed by visiting their website. These insights could be crucial for investors as they weigh the bank's future in a rapidly changing financial landscape.
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