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Tuesday, DA Davidson analysts adjusted their outlook on Comerica (NYSE:CMA) shares, reducing the price target to $56.00 from the previous $62.00 while maintaining a Neutral rating. According to InvestingPro analysis, Comerica appears undervalued at its current price of $50.75. The revision followed Comerica’s announcement of lower revenue forecasts, which include a decrease in net interest income and fee income, attributed to a weaker loan outlook and a sluggish start in the first quarter.
The analysts noted that Comerica surpassed earnings per share (EPS) estimates but revised its revenue projections downward due to the challenges faced at the beginning of the year. The stock’s YTD decline of 17.16% reflects these challenges, though it maintains a modest P/E ratio of 9.54x. Additionally, there was a slight reduction in the bank’s expense guidance.
DA Davidson’s updated projections suggest that Comerica is unlikely to achieve positive operating leverage in 2025, anticipating a -2.4% outcome compared to the -14.1% in 2024. Nevertheless, analysts expect Comerica to recover and achieve positive operating leverage (POL) in 2026, with an estimated 3.1%.
Despite the revisions to revenue and operating leverage forecasts, the analysts highlighted Comerica’s robust credit quality trends and capital levels. They indicated that these financial health indicators remain strong and lead among the bank’s peers. Notably, InvestingPro data shows the bank has maintained dividend payments for 55 consecutive years, demonstrating long-term financial stability. For deeper insights into Comerica’s financial health and future prospects, access the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Comerica Incorporated reported first-quarter earnings per share (EPS) of $1.25, exceeding Wall Street’s expectation of $1.14. The company’s net interest income was a key contributor to this performance, although overall revenue was in line with expectations due to lower fee revenue. UBS maintained a Neutral rating with a $59 price target, while Evercore ISI downgraded the stock to Underperform, reducing the price target to $50, citing concerns over pre-provision net revenue and weaker fee trends. JPMorgan also downgraded Comerica to Underweight, lowering the price target to $52, pointing to non-core earnings contributions and a cautious outlook on loan growth.
Raymond (NSE:RYMD) James, however, retained an Outperform rating, though it adjusted the price target down to $60, highlighting Comerica’s strong capital and liquidity. In a significant leadership move, Comerica appointed Eric Teal as Chief Investment Officer, bringing over 30 years of financial sector experience. Teal will be responsible for shaping the bank’s investment strategy and enhancing its brand. These developments reflect a mixed outlook for Comerica, with analysts expressing varying degrees of caution and optimism regarding the company’s future performance.
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