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Comerica Incorporated

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Comerica’s estimates have been stable lately ahead of its third-quarter 2016 earnings release. The company’s growth prospects look promising given its new revenue and efficiency initiatives (GEAR Up). The initiatives are expected to deliver additional annual pre-tax income of around $230 million by year-end 2018, improve  efficiency ratio to low-60% by the end of 2017, and a sub-60% efficiency ratio by year-end 2018 (without any increase in interest rates). Further, the initial actions will help in achieving a double-digit return on equity.  We expect continuous geographic diversification beyond the company’s traditional and slow-growth Midwest markets to propel growth in the upcoming quarters. However, several issues keep us apprehensive including, regulatory overhangs, exposure in the stressed energy sector and margin pressure amid slow rise in interest rates.

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