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Keefe, Bruyette & Woods reiterated its Market Perform rating and $70.00 price target on Commerce Bancshares (NASDAQ:CBSH) on Tuesday. The research firm cited earnings accretion from the recently announced FineMark acquisition as a key factor in its analysis.
The FineMark acquisition represents approximately 12% of Commerce Bancshares’ legacy balance sheet and is characterized by the firm as a low-risk transaction. KBW described the expected accretion as "an unlocking of trapped earnings" through mark-to-market adjustments of the balance sheet.
Commerce Bancshares is expected to maintain what KBW calls a "best-in-class balance sheet" following the acquisition, with a 17% CET1 ratio and 70% loan-to-deposit ratio. The deal also preserves the bank’s high percentage of quality fee income from wealth management services. InvestingPro data reveals the bank’s strong financial foundation, with an overall health score of "GOOD" and a remarkable 55-year streak of consecutive dividend payments.
KBW emphasized that the transaction should allow Commerce Bancshares to maintain its premium valuation of 2.4 times tangible book value per share. The firm noted this outcome "isn’t always the case with M&A decisions at the industry level."
The research firm raised its 2026 earnings per share estimates for Commerce Bancshares based on the expected accretion from the FineMark deal, while maintaining its existing rating and price target.
In other recent news, Commerce Bancshares has announced a significant acquisition of FineMark Holdings in a $585 million all-stock deal. This transaction will expand Commerce’s portfolio with FineMark’s $4 billion in assets, $3.1 billion in deposits, and $2.6 billion in loans, along with $7.7 billion in assets under administration. The merger is expected to close on January 1, 2026, pending regulatory and shareholder approval. Additionally, Commerce Bancshares disclosed board changes, including the retirement of Mr. Earl H. Devanny III, and the election of new directors during their recent annual meeting.
On the analyst front, Piper Sandler raised its price target for Commerce Bancshares to $66, citing strong first-quarter results and a robust financial performance, although maintaining a Neutral rating. Keefe, Bruyette & Woods adjusted their price target to $70 but retained an Outperform rating, highlighting the bank’s high credit quality and premium valuation. Furthermore, Morgan Stanley (NYSE:MS) upgraded Commerce Bancshares to Equal-weight, viewing it as a defensive option amid current economic uncertainties. These developments reflect a period of strategic growth and analyst interest in Commerce Bancshares.
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