UPDATE: Citigroup Downgrades Comerica to Sell on Valuation, Interest Rate Exposure

Citigroup downgraded Comerica

from Neutral to Sell and raised the price target from $28.00 to $31.00. Citigroup commented, "We view CMA as an above average bank but, at its current valuation, a bad stock. … Importantly, since the vast majority of CMA's loans price off of the very short-end of the yield curve, CMA really needs short rates to move up in order for its earnings to materially move up. … CMA is pricing in a '14 NIM ~28 bps and ~40 bps above our estimate and the consensus estimate, respectively. In order for that to happen, our model suggests that LIBOR in '14 would have to average ~110 bps versus its current ~29 bps and the implied forward rate of ~48 bps. That scenario would likely require at least a few near-term Fed rate hikes. As such, our sense is that the marginal buyer of CMA at its current valuation will be disappointed." Comerica closed at $35.32 on Thursday.