Goldman Sachs analysts downgraded Comerica (NYSE:CMA) from Buy to Neutral, assigning a price target of $71, reflecting a potential 13% upside. The adjustment comes as the bank’s pace of recovery and operational improvements is expected to lag behind peers in a more normalized economic environment.
While Comerica is poised for some tailwinds in 2025, including benefits from BSBY and securities repricing alongside the return of loan growth, challenges remain. A slower pace of rate cuts could keep demand deposit account (DDA) balances under pressure, dampening net interest income (NII) growth. Additionally, expenses are likely to remain elevated due to ongoing investments in core growth and pension-related costs, further weighing on profitability.
According to the analysts, capital returns are also expected to be uneven in the near term, influenced by fluctuations in long-term interest rates. Although Comerica is projected to see earnings uplift and improved efficiency over time, the pace of these enhancements is anticipated to trail that of its peers, reducing its relative appeal.
At its current valuation of $62, trading at 11.5 times 2025 estimated consensus earnings, Comerica’s stock appears to fairly reflect its medium-term earnings potential. While the bank is on a path to fundamental improvement, the combination of mixed drivers and slower progress compared to competitors makes its risk-reward profile less compelling.