On Monday, Baird affirmed a positive outlook on shares of Comerica Incorporated (NYSE:CMA), raising the bank's price target from $65.00 to $75.00 while maintaining an Outperform rating. The adjustment follows Comerica's third-quarter earnings report which surpassed analyst expectations.
Comerica reported a third-quarter earnings per share (EPS) of $1.33, exceeding the consensus estimate of $1.16 and Baird's prediction of $1.29. The firm's analyst highlighted Comerica's core pre-provision net revenue (PPNR) performance, driven by higher-than-anticipated net interest income (NII) and controlled expenses. However, it was noted that fee revenues were slightly weaker than expected.
The bank's credit quality was described as solid, and an announcement was made regarding the resumption of share buybacks in the fourth quarter of 2024. Comerica plans to repurchase approximately $100 million in shares, as their Common Equity Tier 1 (CET1) ratio stands around 200 basis points above their long-term target.
The analyst expressed confidence in the market's recognition of Comerica's shift towards returning capital to shareholders and encouraged investors to continue buying shares in the company. The positive assessment reflects Baird's expectation that the bank's strategic financial management will be well-received by the market.
In other recent news, Comerica Incorporated posted strong third-quarter earnings of $184 million, surpassing expectations. This robust performance was driven by a 1.3% increase in average deposits and a net interest income of $534 million.
Analyst firms Raymond James and Stephens raised their price targets for Comerica to $70, while Citi increased its target to $63, and Barclays (LON:BARC) to $66. Evercore ISI maintained its In Line rating, citing positive expectations for the bank's net interest income and net interest margin.
Comerica's management has expressed confidence in the bank's financial prospects, with expectations of net interest income growth into 2025. The bank's balance sheet is positioned to protect profitability even amid lower interest rates. Furthermore, Comerica plans a $100 million share buyback in the fourth quarter of 2024.
However, the bank's outlook for 2024 includes a projected 5% decline in average loans and a 3-4% decrease in average deposits. These recent developments reflect an increased confidence in Comerica's short-term financial prospects, particularly in terms of net interest income.
InvestingPro Insights
To complement Baird's positive outlook on Comerica Incorporated (NYSE:CMA), recent data from InvestingPro provides additional context to the bank's financial performance and market position. As of the last twelve months ending Q3 2024, Comerica reported a revenue of $3,161 million, with an operating income margin of 29.96%. This solid profitability aligns with Baird's observations on the bank's core performance.
InvestingPro Tips highlight that Comerica has maintained dividend payments for 54 consecutive years, underscoring the bank's commitment to shareholder returns—a point that resonates with the announced resumption of share buybacks. Moreover, the stock's strong return over the last three months, with a price total return of 30.43% in that period, reflects the market's positive reception of Comerica's recent performance and strategic decisions.
It's worth noting that while 8 analysts have revised their earnings upwards for the upcoming period, suggesting optimism about future performance, the stock is currently trading near its 52-week high, with a price at 98.3% of its 52-week peak. This information, along with 11 additional tips, is available on InvestingPro, offering investors a comprehensive view of Comerica's financial health and market position.
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