Comerica downgraded to Neutral from Buy at DA Davidson

DA Davidson downgraded Comerica to Neutral from Buy with a price target of $56, down from $63. The company’s balance sheet is slightly liability sensitive making it difficult for the shares to outperform in a higher for longer interest rate environment, the analyst tells investors in a research note. The firm says Comerica’s net interest income guidance in January was down 11% in 2024 using the forward curve as of December 31, 2023, which incorporated six rate cuts with the first rate cut in March. However, given recent comments by Fed Chairman Jerome Powell who said a March rate cut is unlikely and recent employment data remaining fairly strong, the first rate cut is more likely in June, which will likely lead to additional downside pressure to net interest income than Comerica is forecasting, contends DA Davidson.