Magazine article American Banker

Comerica Strengthens on 'Buy' Signals

Magazine article American Banker

Comerica Strengthens on 'Buy' Signals

Article excerpt

Comerical Inc. was among the most active bank stocks on a quiet summer Tuesday, with shares picking up 87.5 cents to $59.50 in late trading. The gain came on the heels of a 75-cent increase Monday.

The Detroit-based company and analysts attributed the activity to bullish signals that management sent to investors at meetings in Boston and New York at the end of last week.

Fox-Pitt Kelton, the investment firm that sponsored the meetings, has reiterated its purchase recommendation on Comerica, calling its recent union with hometown rival Manufacturers National Corp. "one of the best-conceived bank mergers of the last several years."

The stock price has languished between $56.875 and $62 since the merger closed June 18, although it is well above Comerica's closing price of $42.875 before the merger was announced last Oct. 28.

Mr. Laplante said the stock is still cheap, considering that the merger promises $130 million a year in cost savings, no dilution of shareholder value, and unusually strong asset quality.

"Once Comerica begins to produce the numbers we're talking about, people will sit up and begin to take notice." Mr. Laplante said.

Mr. Laplante said investors are overlooking a potential 20% boost to 1993 earnings due to cost cutting.

With the stock trading at a mere nine times estimated 1993 earnings of $6.70, Mr. Laplante called Comerica "a compelling buy.

"As early as 1993, we believe that Comerica could be producing a return on assets and return on equity of 1.40% and 17. …

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