Bernstein, as a result, downgraded four regional banks to "underperform" from "market perform":
- Comerica (CMA - Get Report) of Dallas. St. Pierre called the company "the poster child for asset sensitivity," as "roughly 65% of assets are tied to the short end of the yield curve and will reprice quickly when rates rise." While calling the shares attractively valued to "normalized earnings," the analyst said that the stock appears "quite expensive" to Bernstein's EPS estimates of $2.70 for 2013 and $2.80 for 2014. Bernstein's price target for the shares is $27.
- KeyCorp (KEY - Get Report) of Cleveland. "KEY is also quite asset-sensitive," according to St. Pierre, with about 46% of assets set to reprice during 2013. The analyst said that "on 2013-2014 EPS, the stock appears rich." Bernstein's price target for the shares is $8, with a 2013 EPS estimate of 89 cents, increasing to 90 cents for 2014.
- Regions Financial (RF - Get Report) of Birmingham, Ala. St. Pierre said the stock is currently trading at a forward price-to-earnings ratio of 93% to his firm's 2014 EPS estimate, when compared to the forward P/E for the S&P 500 (SPX.X). Bernstein's price target of $7 "represents a 75% relative P/E (versus the S&P 500) on our 2014 EPS estimate of $0.74," which matches the long-term average relative to the index. The firm's 2013 EPS estimate is 76 cents.
- Zions Bancorporation. "Among the 'asset-sensitive' names, we believe ZION will be the long-term winner," St. Pierre said, "as it possesses many of the underlying qualities we like to see in a regional bank." But the analyst said the shares are "quite expensive" relative to his firm's 2013 EPS estimate of $1.84 and the 2014 EPS estimate of $1.86. Bernstein's price target for the shares is $20.
-- Written by Philip van Doorn in Jupiter, Fla.
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