Comerica Shares Upgraded By Goldman, Added To 'Conviction Buy' List

Comerica Incorporated CMA announced a strategic plan to boost returns by more than 200bps, while also indicating that it was open to all strategic alternatives. Goldman Sachs’ Ryan M. Nash upgraded the rating on the company from Neutral to Buy, and added the stock to the Americas Conviction List.

Analyst Nash noted that the price target for Comerica, at $52, represents 13 percent upside, versus the average upside of 5 percent for the GS regional banks and credit cards coverage group.

Strategic Actions

Comerica’s strategic plan, called GEAR-UP, is aimed at boosting return on equity to a double-digit range, by improving pretax income by ~$230 million via ~$70 million of revenue enhancements and ~$160 million in cost reductions.

“We feel confident in CMA’s ability to deliver on these targets and believe there is more to come, adding to the current momentum of the stock (+233bps since its 2Q16 strategic plan announcement),” Nash wrote.

Moreover, management had indicated that all strategic options would be considered, implying the possibility of M&A, which would continue to provide downside protection to Comerica’s shares. The analyst added that there was now “a higher probability of outperformance [of the company’s shares] over the next 12 months.”

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