Comerica Analyst No Longer Bullish, Sees 'Attractive Attributes In Coming M&A Cycle'

Shares of Comerica Incorporated CMA fell in premarket trading on Monday, after the company last week reported its fourth-quarter earnings.

The company faces nearer-term earnings challenges, which put into question its ability to “generate positive operating leverage into 2025,” according to Raymond James.

The Comerica Analyst: Michael Rose downgraded the rating for Comerica from Outperform to Market Perform.

The Comerica Thesis: Its interest rate positioning, which is now “fairly neutral,” creates a “formidable challenge” for the company to return to net interest income and net interest margin levels that it achieved in 2022 and 2023, Rose said in the downgrade note.

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“Moreover, given ongoing expense headwinds which will include increasing amounts of costs related to the eventual crossing of $100 billion in assets, we now see shares as fairly valued where we don’t currently project a return to a 1% ROA until 4Q25,” the analyst wrote.

Comerica is likely to continue benefiting from its “ongoing AOCI recapture where share repurchases should return over time (although our model does not currently contemplate any through 2025),” he added.

“Additionally, we see its attractive footprint and highly-commercial business model/ mix as attractive attributes in the coming M&A cycle which in our view should help to support relative valuation even if it decides to remain independent,” Rose further stated.

CMA Price Action: Shares of Comerica declined by 0.48% to $52.35 in premarket trading on Monday.

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