Comerica (CMA, $71.32) stock gets a rating downgrade & price target cut by Goldman Sachs

Shares of financial Services company Comerica got downgraded by Goldman Sachs.

Goldman analysts lowered their rating on the stock to sell from neutral. They also slashed their price target on the shares to $70 from $86.

Analyst Ryan Nash cautioned clients in a note that the Federal Reserve’s interest rate cuts could offset Comerica’s commendable actions at boosting loan growth, controlling costs and returning capital. Nash pointed out that Comerica’s  disclosures indicate that its NII (net interest income) will decline by 12% from a 200bp decrease in rates (100bp average) compared to its peers' disclosures at a lower 5%. Nash further added that while Comerica has invested in $2.8 billion of swaps to hedge the interest rate risks, his team estimates that the company would need an additional $20 billion-$24 billion to be sufficiently hedged.

According to Nash, several expense advantages in 2019 that helped Comerica to keep costs flat are unlikely to repeat (FDIC costs, GEAR up savings). He also noted that most of its excess capital has been used up.

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Sergey Savastiouk, Ph.D. has a degree in Applied Mathematics from Moscow University and has extensive experience as an entrepreneur, investor, manager, and mathematician. His professional expertise is in applied mathematics, mathematical modeling, system and pattern analysis, and software and hardware system integration. He has served as the CEO of several hi-tech start-up companies and nonprofit organizations, which has given him proven capabilities in business strategy for high-tech start-up companies, market assessment, company formation, team building, product development, marketing, and sales. He has published numerous articles in journals and magazines on related fields. As a retail investor, he spent 15 years developing his proprietary trading and quantitative algorithms (now Tickeron’s A.I.), which brought him significant returns in trading the stock market. His current work and goal in founding Tickeron is to bring professional, sophisticated stock market analysis capabilities to retail investors via an easy-to-use interface.