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On Monday, Raymond (NSE:RYMD) James adjusted its outlook on Comerica Incorporated (NYSE:CMA), revising the bank’s price target downwards to $60.00 from the previous $67.00 while sustaining an Outperform rating. The decision came in response to Comerica’s first-quarter results of 2025, which, while surpassing forecasts on a core earnings per share (EPS) and pre-provision net revenue (PPNR) basis, presented an updated outlook that might pose challenges. According to InvestingPro data, six analysts have recently revised their earnings expectations downward for the upcoming period, though the stock remains undervalued based on Fair Value analysis.
Comerica’s stock underperformed on Monday despite the fact that the anticipated earnings for the coming years were only slightly affected. Trading at $50.01, the stock has declined significantly over the past three months. This minor adjustment takes into account Comerica’s ongoing share repurchase program, which indicated a potential buyback of approximately $100 million in the second quarter of 2025, mirroring its activity from the fourth quarter of 2024. Notably, the bank has maintained dividend payments for 55 consecutive years, currently offering a 5.36% yield.
The firm’s fee income forecast has drawn some skepticism from Raymond James due to its implication of a significant increase in the next three quarters to meet its approximately 2% growth guidance. This includes expectations for growth in capital markets revenues.
Despite the lowered EPS estimate for 2026, Raymond James remains optimistic about Comerica’s investment potential. The firm’s strong capital and liquidity, consistent credit quality, and strategic market positioning, paired with its appeal for potential takeovers, present a favorable risk-reward scenario. With a market capitalization of $6.56 billion and a P/E ratio of 9.96x, InvestingPro analysis reveals compelling valuation metrics. This is especially notable given its current valuation, where Comerica’s shares trade at just 0.8 times adjusted tangible book value (TBV) after accounting for accumulated other comprehensive income (AOCI), which is lower than its peers’. For deeper insights into Comerica’s valuation and growth prospects, access the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Comerica Inc . reported its first-quarter 2025 earnings, showcasing an earnings per share (EPS) of $1.25, which exceeded analyst predictions of $1.16. However, the company’s revenue slightly missed expectations, coming in at $829 million versus the forecasted $831.13 million. Despite the earnings beat, Comerica experienced a decline in average loans and deposits, with deposits decreasing by $1.4 billion. The company’s net interest income remained steady at $575 million, with a 12 basis point expansion in net interest margins. Comerica projects a 1-2% decline in average loan growth for the year, expecting recovery in the latter half, and anticipates a 5-7% increase in full-year net interest income. Additionally, Comerica’s stock was noted to have declined in pre-market trading following the earnings announcement. The company also highlighted its strategic focus on maintaining a strong capital position and adapting to market dynamics amidst economic uncertainties. Analyst firms such as RBC Capital Markets and Piper Sandler engaged with Comerica’s executives during the earnings call, seeking insights into the company’s deposit strategy and competitive positioning.
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