Odeon Capital Upgrades Comerica (CMA) to Buy; 'Unlikely to Fail'
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Odeon Capital analyst Dick Bove upgraded Comerica (NYSE: CMA) from Hold to Buy with a price target of $47.24.
The analyst commented, "The rating on Comerica is being raised from Hold to Buy. The reason is that the valuation of this stock has fallen to a level which makes it attractive:
- It has declined from a high of $101.24 per share in January 2022 to a low of $31.21 per share in early May this year. It is now at $40.93 per share.
- The reasons for the decline, explained below, indicated that there was a great deal of logic behind the stock price decline.
- This company basically ticks off every potential negative facing the banking industry.
However, despite these negatives
- This company is unlikely to fail.
- The real value of its assets is more reasonably stated on its balance sheet than for most other banks
- It is liquid.
- Its cash flow is such that it is likely to maintain its dividend.
Therefore, valuing it below book value at a roughly 7.0% yield seems excessive. Moreover, its attractiveness as an acquisition candidate is undiminished. For investors unwilling to step up to the common, the bank has an attractive 5.625% preferred issue with a 10.89% yield to worst."
Shares of Comerica closed at $40.93 yesterday.
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