Regional banker Comerica Incorporated (CMA) saw its price target and earnings estimates boosted on Tuesday by analysts at FBR Capital Markets.
The analyst, which maintained its "Market Perform" rating on CMA, raised its downside price target on the stock to $35 U.S. from $33 U.S. Comerica shares had closed at $36.29 U.S. on Monday.
FBR Capital noted that "We are raising our FY10 and FY11 core EPS estimates to $0.50 U.S. and $2.25 U.S., respectively, from a loss of $0.45 U.S. and EPS of $1.60 U.S., respectively. We have also lowered our normalized EPS range to $3.50 U.S. to $4.00 U.S., from $3.75 U.S. to $4.25 U.S.
"Our updated estimates are driven by the company's $800-million U.S. common equity raise and its repayment, according to our expectation, of the $2.25 billion U.S. of TARP in FY10, versus our prior expectation of FY11.
"We view the announcement positively as it removes an overhang on the stock; and, while upside to the normalized may be more limited as a result of the raise, we expect the shares to continue to receive support from investors seeking to invest in asset-sensitive names.
"We believe the company has managed credit through this cycle incredibly well, despite having some potentially more challenging exposures in the Midwest, California, and Florida; and, given the company's highly asset-sensitive balance sheet, we think the expectation of future rate hikes will continue to support the shares over the next year.
"We continue to wait for a more compelling entry point as shares now trade near nine to 10 times our normalized expectation, assuming a NIM well over 4% and an ROA near the 1.15% level."
Comerica shares fell 94 cents U.S., or 2.6%, in premarket trading Tuesday.
The Bottom Line
Shares of CMA have a dividend yield of .55%, based on last night's closing stock price of $36.29 U.S. The stock has technical support in the $30-$31 U.S.price area. If the shares can firm up, there could be overhead resistance around the $37-$40 U.S. price levels. But some experts would remain on the sidelines for now.
Comerica Incorporated (CMA) is not recommended at this time, holding a Dividend.com DARS Rating of 3.2 out of five stars.
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