Is Comerica Headed For A Net Interest Income Inflection? 'We Remain Optimistic,' Analysts Say

Shares of Comerica Inc CMA were tanking in early trading on Monday, after the company reported its second-quarter results.

The results came amid an exciting earnings season. Here are some key analyst takeaways.

• Truist Securities analyst Brandon King downgraded the rating from Buy to Hold, while reducing the price target from $55 to $53.
• RBC Capital Markets analyst Jon Arfstrom reiterated an Outperform rating, while cutting the price target from $58 to $56.
• Piper Sandler analyst Scott Siefers maintained a Neutral Overweight rating, while lifting the price target from $51 to $52.

Check out other analyst stock ratings.

Truist Securities: "We believe the NII/NIM (net interest income / net income margin) trajectory is now less appealing given continued NIB (non-interest bearing) deposit outflows," King said in the downgrade note. The mix will likely decline to 35% by yearend 2025, versus the previous estimate of 37%.

"Moreover, the loss of $3.3bn in Direct Express NIB deposits over the next few years will likely limit CMA’s ability to lower deposit costs in a Fed easing cycle as CMA intends to replace those deposits with core customers," the analyst wrote. He added that the loan growth expectations for the second half 2024 and 2025 had also been lowered.

RBC Capital Markets: Comerica reported earnings of $1.49 per share. Core earnings came in at $1.53 per share and beating consensus of $1.18 per share, Arfstrom said. "Core results had noninterest income and expense trends coming in better than consensus," he added.

Comerica continues to face environmental pressures, although net interest income trends were broadly in-line with expectations, the analyst stated. "Overall, we see the core outlook as consistent, and we remain optimistic that noninterest bearing deposit stability is achievable in the near term (a rate cut would help) and can drive core net interest income inflection," he further wrote.

Piper Sandler: Comerica's performance in the second quarter was much better than anticipated. But, the third-quarter and full-year guidance "tells a different story," Siefers said. The company's NII, fees, and expenses are likely to be under pressure in the third quarter, he added.

While the revised guidance "puts quite a bit of downward pressure" on estimates, "we will likely need a strong ramp up in end-of-year loan growth to hit them," the analyst wrote. He lowered the earnings estimates for 2024 and 2025 from $4.82 to $4.59 and from $5.96 to $5.22, respectively.

CMA Price Action: Shares of Comerica had declined by 0.93% to $49.95 at the time of publication on Monday.

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