Comerica Incorporated (NYSE: NYSE:CMA) has received a reiterated Neutral rating and a $55.00 price target from DA Davidson. The financial institution, ahead of an investor conference presentation, provided an update on its average loan and deposit trends up to August 31.
The update included some cautious remarks about the loan and deposit outlooks but confirmed expectations for Net Interest Income (NII) to align with guidance. Additionally, Comerica highlighted that its balance sheet is well-positioned to benefit from lower interest rates.
The $55 price target set by DA Davidson reflects a price-to-earnings (P/E) multiple of 9.9 times the firm's 2025 earnings per share (EPS) forecast of $5.62. DA Davidson has not made any changes to its EPS estimates for Comerica for the years 2024 and 2025, maintaining the figures at $5.15 and $5.62, respectively.
The analyst's comments came following Comerica's mid-quarter update, which is a routine disclosure prior to presenting at investor conferences. The bank's update offered a glimpse into its current financial trends, yet it also conveyed a note of caution regarding future loan and deposit figures.
Comerica Incorporated has experienced several adjustments in its financial projections. Analysts from Piper Sandler maintained a Neutral rating on Comerica shares, noting the bank's weaker outlook post-second-quarter earnings and the loss of its Direct Express relationship.
Despite these challenges, potential rate cuts and merger and acquisition discussions in the banking sector could introduce a support factor for banks the size of Comerica.
Comerica's aggressive loan growth ambitions and the expected contraction of net interest income (NII) through the third quarter of 2024 are areas of interest for investors. 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.
Lastly, 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.
InvestingPro Insights
As Comerica Incorporated (NYSE:CMA) navigates a cautious loan and deposit landscape, InvestingPro data provides additional context to the bank's financial health and market position. With a market capitalization of $7.36 billion and a P/E ratio that has adjusted to 11.84 over the last twelve months as of Q2 2024, Comerica's valuation is in line with industry standards. Despite a revenue decline of 14.47% over the same period, the company has managed an impressive operating income margin of 32.26%, showcasing efficient cost control and operational management.
Notably, Comerica has demonstrated a strong return over the last three months, with a 19.09% price total return, reflecting positive investor sentiment. This is further underscored by a robust 25.77% price total return over the past year, indicating sustained growth in shareholder value. Additionally, with a dividend yield of 5.12%, Comerica continues to reward its investors, maintaining dividend payments for 54 consecutive years, a testament to its financial stability and commitment to shareholders.
InvestingPro Tips suggest that while Comerica suffers from weak gross profit margins and is expected to see a drop in net income this year, analysts predict the company will remain profitable. In fact, Comerica has been profitable over the last twelve months. For those interested in a deeper dive into Comerica's financial performance and future outlook, InvestingPro offers additional tips, with a total of five more insights available at https://www.investing.com/pro/CMA.
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