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On Thursday, Piper Sandler adjusted its outlook on Commerce Bancshares (NASDAQ:CBSH), increasing the price target to $66 from $65 while maintaining a Neutral stock rating. The firm’s analyst highlighted Commerce Bancshares’ strong first-quarter results, which showed outperformance in each pre-provision net revenue (PPNR) component and no unexpected developments from management discussions. The bank, currently valued at $8.16 billion, has demonstrated consistent performance with revenue growth of 4.97% over the last twelve months.
Commerce Bancshares’ recent financial performance has been robust, with the company delivering solid results in the first quarter. The analyst pointed out that the bank’s credit profile is pristine and its revenue diversity is enviable. Additionally, the bank has been noted for its above-average profitability and superior capital levels. According to InvestingPro, the bank has maintained dividend payments for 55 consecutive years and raised dividends for 11 straight years, demonstrating remarkable financial stability. These attributes make Commerce Bancshares an attractive holding, especially in the current "risk-off" environment, where investors are cautious due to macroeconomic volatility.
Despite the positive outlook on the bank’s stability and performance, Piper Sandler remains Neutral on the stock. The firm cited limited visibility on potential catalysts that could further expand Commerce Bancshares’ current premium valuation. The valuation stands at 14.6 times and 14.4 times the firm’s estimated earnings per share (EPS) for 2025 and 2026, respectively, compared to its peers, which are valued at 11.4 times and 10.1 times. InvestingPro analysis indicates the stock is currently trading at Fair Value, with a P/E ratio of 15.71x and an overall Financial Health score of "GOOD."
Piper Sandler has increased its EPS estimates for Commerce Bancshares for the years 2025 and 2026 by 3% and 1%, respectively, to $4.10 and $4.15. This revision reflects an improved outlook for net interest income (NII) and operating expenses. The new price target of $66 represents a modest increase of $0.50 and is based on 16.0 times the firm’s estimated 2026 EPS. This valuation is slightly above the historical long-term premium of 4 to 5 times over peers, justified by Commerce Bancshares’ "safe haven" characteristics in the current uncertain economic climate. Notably, InvestingPro data reveals that two analysts have recently revised their earnings downward for the upcoming period, suggesting some caution may be warranted.
In other recent news, Commerce Bancshares has reported a strong financial performance, surpassing expectations with a $0.09 per share pre-provision net revenue surplus, driven by higher revenues and controlled expenses. The bank’s credit quality remains strong, with analysts at Keefe, Bruyette & Woods maintaining an Outperform rating despite lowering the price target from $74 to $70. Morgan Stanley (NYSE:MS) also adjusted its stance on Commerce Bancshares, upgrading the stock to Equal-weight from Underweight, citing the bank’s defensive qualities and solid capital levels. In addition, Commerce Bancshares announced a 7% increase in its quarterly dividend to $0.275 per share, reflecting its ongoing commitment to shareholder value. The bank also disclosed changes to its executive compensation structure, with new salary figures and performance-based bonuses for top executives. These adjustments are part of the company’s regular review and adjustment of executive pay. Morgan Stanley forecasts an improvement in the bank’s net interest margin and net interest income throughout 2025, highlighting its ability to reprice fixed-rate assets. These developments underscore Commerce Bancshares’ robust position amid economic uncertainties.
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