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Citigroup Cuts Regional Banks

Stocks in this article: WFC HBAN KEY CMA ZION SIVB

Shares of Comerica (CMA) of Dallas closed at $28.94 Thursday, returning 12.5% year-to-date, after dropping 38% during 2011. Based on a quarterly payout of 15 cents, the shares have a dividend yield of 2.07%.

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Comerica's shares trade for 0.9 times tangible book value, and for 11 times the consensus 2013 EPS estimate of $2.71. The consensus 2012 EPS estimate is $2.51.

Levin rates Comerica a "Sell," and lowered his price target for the shares to $28 from $29, while leaving his 2012 EPS estimate unchanged at $2.45 and cutting his 2013 estimate by a nickel to $2.55 and his 2014 estimate by 15 cents to $2.80.

The analyst estimates that Comerica's net interest margin will be 3.11% in 2012 and 2013, rising to 3.15% in 2014. Under the "flat rate scenario," Levin estimates that the company's margin would decline from 3.09% in 2012 to 3.03% in 2013 and 3.02% in 2014.

Levin calls Comerica a "well-run company with a highly talented and capable management team, saying that the bank's focus on commercial and industrial lending "exposes it to that segment of the loan market which we believe will experience the highest growth over the next one to two years." But Citigroup believes "the stock is over valued at its current valuation given that we project that CMA will have the greatest gap in our coverage universe between its return on equity, or ROE and its cost of equity over the next two years."

Interested in more on Comerica? See TheStreet Ratings' report card for this stock.

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