Comerica stock rating cut to Underperform at Evercore ISI

Tuesday, Evercore ISI analysts downgraded Comerica (NYSE:CMA) stock from In Line to Underperform and reduced its price target to $50 from the previous $65. The stock, currently trading at $50.60, has declined 17.16% year-to-date according to InvestingPro data. The downgrade follows Comerica’s first-quarter results and reflects a more cautious outlook on the bank’s pre-provision net revenue (PPNR) and an adjustment to management’s expectations, particularly concerning lower fee trends.

Analysts at Evercore ISI have revised their earnings per share (EPS) estimates for Comerica for the years 2025 and 2026. The new estimates are $5.19 and $5.60, down from $5.29 and $5.75, respectively. InvestingPro data shows that six analysts have recently revised their earnings downward for the upcoming period. This change is due to a combination of factors, including anticipated Federal Reserve rate cuts, weaker loan growth, and an increase in loan loss provisions and charge-offs.

In their analysis, the analysts acknowledged Comerica’s strengths, such as its commercial orientation and geographic presence. However, they pointed out that Comerica is likely to face revenue headwinds, including reduced loan demand and weaker fee trends. They also noted that Comerica might not have sufficient expense flexibility to protect its bottom line against these top-line pressures.

The analysts further mentioned Comerica’s high efficiency ratio in the high-60s and management’s view that revenue, rather than expenses, would be the key driver of potential efficiency improvements in the future. This outlook suggests limited scope for Comerica to offset revenue pressures through cost management.

Despite the possibility that a pick-up in the banking sector’s mergers and acquisitions activity could support Comerica’s share price, Evercore ISI analysts believe that there are other banks with more significant earnings levers and catalysts that are likely to outperform. They also highlighted that Comerica’s stock trades at approximately 8.9 times their 2026 EPS estimate, which is a premium compared to the ~8.5 times multiple of its midcap bank peers. The stock currently trades at a P/E ratio of 9.57x and offers a notable dividend yield of 5.61%, having maintained dividend payments for 55 consecutive years. According to InvestingPro Fair Value analysis, the stock appears undervalued at current levels, though analysts expect this premium to face pressure over time due to persistent earnings risks.

In other recent news, Comerica Incorporated reported its first-quarter 2025 earnings, revealing an earnings per share (EPS) of $1.25, which exceeded analysts’ forecasts of $1.16. Despite this earnings beat, Comerica’s revenue slightly missed expectations, coming in at $829 million compared to the anticipated $831.13 million. Following these results, Comerica’s stock experienced a decline in pre-market trading. JPMorgan analysts downgraded Comerica’s stock from Neutral to Underweight, adjusting the price target down to $52, citing concerns about the sustainability of Comerica’s net interest income and loan growth amidst macroeconomic uncertainties. Meanwhile, Raymond (NSE:RYMD) James maintained an Outperform rating but lowered the price target to $60, expressing skepticism about Comerica’s fee income forecast and its reliance on capital markets revenue growth. Comerica continues its share repurchase program, indicating a potential buyback of approximately $100 million in the second quarter of 2025. Despite challenges, Raymond James remains optimistic about Comerica’s investment potential, citing strong capital and liquidity positions. These developments illustrate the complex landscape Comerica navigates as it faces both opportunities and challenges in the current economic environment.

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