JP Morgan Sees Upside Despite In-line Quarter For Comerica

JP Morgan has published a research report on Comerica Incorporated CMA after the company reported in-line 4Q results that JP Morgan believes may even elicit a near-term positive upside. In the report, JP Morgan writes "Although 4Q10 trends were generally in line with expectations on the operating side, with the potential for a positive stock reaction given provision expense coming in well below forecast and the company guiding to a much improved provision level in 2011, CMA shares traded sharply lower on concurrent news that the bank was purchasing Sterling (SBIB) in an all stock transaction. Although Sterling appears to be a very good strategic fit for Comerica, the price CMA agreed to pay SBIB in the sale was rich in our view, resulting in sharp near-term erosion of tangible book value (to the tune of $2.48 per share). What we found is that taking a long-term view doesn't always translate into positive economic gain for shareholders when the timeframe under consideration is well beyond the typical holding period for a stock, even for investors that are considered long-term type investors. While we are disappointed in the level of near-term pain being realized for longer-term gain, from this lower point we see the stock as an outperformer through YE11." JP Morgan maintains its Overweight rating but has lowered the price target from 447 to $44. Comerica Incorporated closed yesterday at $38.74.