Nash stated, "CMA has failed to earn its cost of capital" since 2010, but recently the company's decision to hire a consulting firm to explore "strategic alternatives" has the analyst positive on the company.
In addition to opportunities to improve returns, the company is open to strategic alternatives as well. Major restructuring of the company could raise its return on equity to 10 percent. In a potential M&A deal, Comerica could gain a valuation of $60–$70. The "potential for strategic actions will likely provide downside protection to shares," Nash noted.
Organic Plan
Restructuring would increase returns from 7 percent to 10 percent with expense and revenue initiates and capital optimization. If properly done it could push valuation to $57.
Strategic Plan
With Comerica's history and recent metrics, CMA could "achieve a $60–$70 valuation in a sale," Nash said.
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