The abrupt failure of SVB Financial Group (NASDAQ:SIVB) weighed on the shares of the regional banks. Given the selling pressure, Comerica (NYSE:CMA) closed 27.67% lower on March 13. Adding to its pain, Moody’s (NYSE:MCO) placed Comerica on review for a downgrade.
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The credit rating agency cited concerns over unrealized losses in the asset portfolio and reliance on uninsured deposit funding for the move. Along with CMA, Moody’s put four other regional banks on the downgrade review list, including First Republic Bank (NYSE:FRC) and Western Alliance Bancorporation (NYSE:WAL).
It’s worth highlighting that Comerica’s deposits decreased by $2.2 billion in 2022. Meanwhile, management expects its average deposits to decline by 7% to 8% in 2023. However, the bank stated that its loan-to-deposit ratio of 75% is well below historical levels. Moreover, it expects the same to remain lower than the historical levels in the future.
While the bank doesn’t see any challenges to funding its loan growth, higher-than-anticipated deposit outflows could play spoilsport.
Recently, Piper Sandler analyst Scott Siefers cut his price target on Comerica stock to $70 from $82. The analyst remains on the sidelines as he expects deposit issues will likely raise concerns regarding the durability of NII (Net Interest Income).
Is Comerica Stock a Buy or Hold?
Comerica stock is up about 10.48% in the pre-market session today as regulators urge calm with their emergency measures. Meanwhile, the CMA stock has a Moderate Buy consensus rating on TipRanks, based on nine Buys, five Holds, and two Sells.
Meanwhile, analysts’ average price target of $81.53 implies 91.65% upside potential.
