Comerica (CMA – Research Report), the Financial sector company, was revisited by a Wall Street analyst yesterday. Analyst Mike Mayo from Wells Fargo maintained a Sell rating on the stock and has a $52.00 price target.
Mike Mayo has given his Sell rating due to a combination of factors that suggest Comerica’s stock may face headwinds in the near future. Comerica’s first quarter earnings in 2024 outperformed expectations primarily because of higher net interest income (NII), lower credit provisions, and a favorable tax rate. However, the outlook provided by management was less promising, with anticipated declines in non-interest income and an increase in tax rates. Additionally, there were concerning trends noted in the quarter-over-quarter performance, including a significant drop in net interest margin (NIM) and an uptick in the cost of interest-bearing deposits.
Mayo’s concerns extend to the company’s credit performance, despite a short-term decrease in net charge-offs. There was a notable rise in nonperforming assets, suggesting potential future credit quality issues. Comerica’s loan balances also decreased, which, while raising the reserve ratio, could indicate weaker loan demand. Furthermore, Mayo adjusted the earnings per share (EPS) estimates downward for 2024, reflecting the less favorable fee guidance and higher tax expectations. Despite a steady capital position, the overall forecast for Comerica’s financial performance led to the Sell rating, as the company seems poised to confront several challenges that could impact its stock value.
Mayo covers the Financial sector, focusing on stocks such as Citigroup, JPMorgan Chase & Co., and Bank of New York Mellon Corporation. According to TipRanks, Mayo has an average return of 10.5% and a 63.00% success rate on recommended stocks.
TipRanks tracks over 100,000 company insiders, identifying the select few who excel in timing their transactions. By upgrading to TipRanks Premium, you will gain access to this exclusive data and discover crucial insights to guide your investment decisions. Begin your TipRanks Premium journey today.
Comerica (CMA) Company Description:
Comerica, Inc. engages in the provision of financial services. It operates through the following segments: Business Bank, Retail Bank, Wealth Management, Finance, and Other. The Business Bank segment involves in the middle market businesses, multinational corporations, and governmental entities by offering various products and services such as commercial loans and lines of credit, deposits, cash management, capital market products, international trade finance, letters of credit, foreign exchange management, and loan syndication. The Retail Bank segment includes small business banking and personal financial services, which consist of consumer lending, consumer deposit gathering, and mortgage loan origination. The Wealth Management segment offers fiduciary services, private banking, retirement services, investment management and advisory services, investment banking and brokerage services. The Finance segment comprises corporation’s securities portfolio and asset and liability management activities. The Other category consists of income and expense impact of equity and cash, tax benefits, charges of an unusual or infrequent nature that are not reflective of the normal operations, and miscellaneous other expenses of a corporate nature. The company was founded in 1973 and is headquartered in Dallas, TX.
