Market Overview

4 Takeaways From Comerica's Q3 EPS Beat

Related CMA
Earnings Scheduled For April 18, 2017
How To Find New Stocks To Buy

Close on the heels of Comerica Inc (NYSE: CMA) delivering an earnings beat for the third quarter, Baird maintained an Outperform rating and target price of $52 on the stock.

The firm thinks that lower credit costs were behind the earnings beat. Analysts David George and Garrett Holland pointed out $38 million sequential savings from costs provision. The analysts are also adding $40 more million to the company's "Gear Up" initiative. At the end of the year 2018, the initiative is predicted to deliver $270 million gain.

The brokerage listed the following four key takeaways:

  • Net interest income advanced 1 percent on a quarter-over-quarter basis to $450 million fueled by increased Fed balances.
  • While core fees demonstrated improvement, the company did well to control its core expenses.
  • Improvement in credit quality with NCO dropping to 0.13 percent of average loans in the third quarter from 0.38 percent in June quarter.
  • Solid capital levels with the Basel III Tier 1 common ratio improvement while tangible book value grew 1.5 percent to $41.15.

In a note, Baird said, "Shares are currently trading at ~1.2x TBV, a discount to mid-cap bank peers (~1.45x). Shares have historically traded at ~1.8x TBV. Our $52 weighted-average price target assumes a 70% weighting for the traditional target of $48 (~1.15x 2016E TBV, in line with the median P/TBV multiple post crisis) and 30% weighting for a ~$60 target in an M&A scenario (~1.5x P/TBV, in line with recent regional bank transactions)."

Latest Ratings for CMA

Jan 2017CitigroupDowngradesNeutralSell
Jan 2017JP MorganUpgradesNeutralOverweight
Dec 2016Bank of AmericaUpgradesUnderperformNeutral

View More Analyst Ratings for CMA
View the Latest Analyst Ratings

Posted-In: BairdAnalyst Color Analyst Ratings


Related Articles (CMA)

View Comments and Join the Discussion!