JPMorgan cuts Comerica stock rating to underweight, target to $52

On Tuesday, JPMorgan analysts downgraded Comerica Incorporated (NYSE:CMA) shares, listed on the New York Stock Exchange (NYSE: CMA), from a Neutral stance to Underweight and lowered the price target to $52 from the previous $64. This adjustment follows Comerica’s first-quarter earnings report for 2025. According to InvestingPro data, six analysts have recently revised their earnings expectations downward, with current analyst targets ranging from $55 to $80.

Comerica reported a first-quarter GAAP EPS of $1.25, surpassing the consensus estimate of $1.14. However, JPMorgan pointed out that $0.16 of the earnings per share for the quarter were attributable to favorable Bloomberg Short-Term Bank Yield Index (BSBY) impacts, which the analysts do not consider to be a core part of Comerica’s earnings. Despite Comerica’s updated 2025 outlook indicating only a 1% reduction to consensus pre-tax pre-provision (PTPP) income estimates, JPMorgan foresees a challenging future for the bank. InvestingPro analysis shows the bank maintains a P/E ratio of 9.57 and has remained profitable over the last twelve months, with analysts projecting continued profitability for 2025.

The analysts observed that Comerica’s net interest margin (NIM) increased by 12 basis points quarter-over-quarter in the first quarter of 2025, but 7 basis points of this rise were due to favorable BSBY impacts. JPMorgan expressed skepticism regarding the net interest income (NII) outlook for 2025, noting that while a projected growth range of 5-7% might seem positive, a significant portion of this expected growth is tied to BSBY rather than core factors such as balance sheet growth.

Moreover, JPMorgan analysts are cautious about Comerica’s loan growth guidance, which predicts a decline of 1-2% on an average basis in 2025, a downgrade from the previous forecast of flat to up 1%. The analysts doubt there will be an uptick in loan growth in the second half of 2025 due to elevated macroeconomic uncertainty and cautious customer sentiment, as well as persistent headwinds from the commercial real estate (CRE) portfolio, which are expected to remain at least for the next few quarters.

This revised outlook contributed to Comerica’s share underperformance on Monday, with Comerica’s stock falling 4.4%, compared to a 1.1% decline in the KBW Bank Index (KRX). InvestingPro data indicates the stock has declined 17.16% year-to-date, though it maintains an impressive 55-year streak of consecutive dividend payments with a current yield of 5.61%. Based on InvestingPro’s Fair Value analysis, Comerica appears undervalued at current levels. For deeper insights into Comerica’s valuation and comprehensive analysis, investors can access the detailed Pro Research Report, available exclusively to InvestingPro subscribers.

In other recent news, Comerica Incorporated reported its first-quarter 2025 earnings, with earnings per share (EPS) of $1.25, surpassing analysts’ expectations of $1.16. Despite this earnings beat, the company’s revenue slightly missed forecasts, coming in at $829 million compared to the anticipated $831.13 million. Raymond (NSE:RYMD) James adjusted its outlook on Comerica, lowering the price target from $67.00 to $60.00 while maintaining an Outperform rating due to concerns about the company’s updated outlook. The firm noted that Comerica’s fee income forecast implies significant growth in the next three quarters, which has drawn some skepticism. Comerica’s net interest income remained stable at $575 million, with net interest margins expanding by 12 basis points, although average loans and deposits experienced slight declines. The company plans a share repurchase program with a potential buyback of approximately $100 million in the second quarter of 2025. Raymond James expressed optimism about Comerica’s investment potential, citing its strong capital and liquidity, consistent credit quality, and strategic market positioning. Despite some skepticism, Comerica’s shares trade at 0.8 times adjusted tangible book value, considered favorable compared to its peers.

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