UPDATE: Raymond James Upgrades Comerica (CMA) to Outperform for 3 Fundamental Reasons
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Raymond James analyst Michael Rose upgraded Comerica (NYSE: CMA) from Market Perform to Outperform and establishing a price target of $71.00. The upgrade reflects 1) the steepening of the yield curve (2-10 spread widest since April 2017), 2) recent discussion of tapering of central bank asset purchases, and 3) the prospect of the Fed increasing rates sooner than 2024.
These factors contributed to the outperformance of CMA shares coming out of the Great Financial Crisis (GFC) which should contribute to stronger performance vs. peers/the market as we further emerge from the current downturn. The analyst stated "While there are many parallels with the GFC, we believe the virus-driven nature of the current downturn where the economy was on solid footing going into forced lockdowns in many areas of the country, will rebound more sharply/quickly than during the GFC. In turn, we see an improving risk-reward dynamic that will fuel continued outperformance of CMA shares despite below peer profitability until the Fed actually raises rates. Moreover, we see its better than peer credit metrics and solid loss absorption capacity, increasing capital flexibility, attractive dividend yield (peer high at 4.3%), and scarcity value as additional positive attributes/catalysts for CMA shares".
Shares of Comerica closed at $63.68 yesterday.
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