Commerce Bancshares (CBSH) Stock Forecast & Price Target

Commerce Bancshares Inc. has demonstrated robust financial health, evidenced by a 3% increase in tangible book value (TBV) and a notable 41 basis points rise in tangible common equity (TCE) during the last quarter, alongside strong profitability metrics reflected in a reported return on assets (ROA) of 1.78% and return on tangible common equity (ROTCE) of 15.9%. The bank is experiencing a solid growth trajectory in loans, with a 3% increase in end-of-period loans reflecting a stronger pipeline, particularly within commercial and industrial sectors, which is further complemented by ongoing momentum in its wealth management segment. With expectations for continued loan and deposit growth in the low-to-mid single-digit range and revised operating EPS projections for 2025 and 2026, Commerce Bancshares is positioned favorably for sustained performance.

Commerce Bancshares Inc has experienced a significant underperformance relative to its peers, with a 12% year-to-date decline compared to the KRE index, which has contributed to its shares reaching historically low valuation levels within the past five years. The bank is facing challenges with net interest margin (NIM) compression, which declined by 6 basis points to 3.64%, attributed to lower cash and securities yields, impacting its net interest income and overall financial stability. Additionally, projections for operating earnings per share (EPS) have been reduced by 2-3% for 2025 and 2026, reflecting a downward revision in net interest income and loan growth expectations, further exacerbating the bank's financial outlook.