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Put Players Converge on Comerica, Despite Strong Quarterly Showing

CMA's fourth-quarter profit beat analysts' expectations

by 1/20/2012 12:45:23 PM
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This morning, Comerica, Inc. (CMA - 29.65) unveiled its fourth-quarter results. The Dallas-based bank's profit came in at $96 million, or 48 cents per share, flat from the year-ago period. CMA's bottom line topped analysts' forecast for earnings of 45 cents per share.

CMA has been able to capitalize on these results, jumping more than 3% so far today. This uptick adds to the shares' 11.2% gain for 2012. On a relative-strength basis, the stock has outperformed the broader S&P 500 Index (SPX) by over 14% throughout the past 60 sessions. Earlier in the session, CMA broke through the round-number $30 level, and is within reach of chalking up its first weekly close above this mark since late July.


Even though CMA has been charging higher on the charts lately, puts appear to be gaining momentum. At last check, CMA has seen 4,805 puts change hands -- 10 times its average intraday put volume of 438 contracts, and more than double the number of CMA calls exchanged.

Indeed, the options pits look to be loaded with negativity. During the past two weeks, speculators on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open 1.67 puts for every call. This ratio ranks above 80% of all other readings taken during the past year, suggesting that traders on these exchanges have initiated bearish bets on CMA at a faster pace than usual.

Elsewhere on the Street, short interest depleted by roughly 12% over the most recent reporting period, but still accounts for 4.3% of CMA's float. These bearish bets would take four days to unwind, at the equity's average pace of trading.

The brokerage bunch is also bearishly skewed toward CMA. According to Zacks, 16 out of 27 analysts maintain a "hold" or worse rating for the security. Moreover, the consensus 12-month price target -- as determined by Thomson Reuters -- rests at $30.79, which is a very slight premium to today's intraday high of $30.01. Should the shares continue their winning ways, this alignment leaves the door wide open for potential upgrades and/or price-target hikes.

Considering CMA's solid earnings report and positive price action, a capitulation by any of the bearish analysts and/or traders could give the financial services provider the boost it needs to extend its year-to-date ascent.


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