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 41 basis point rise in tangible common equity (TCE), coupled with strong profitability metrics, including a return on assets (ROA) of 1.78% and a return on tangible common equity (ROTCE) of 15.9%. Additionally, the bank has experienced a 3% quarter-over-quarter growth in end-of-period (EOP) loans, indicating a strengthening pipeline, particularly in commercial and industrial lending, while maintaining expectations for ongoing loan and deposit growth in the low-to-mid single digits for the year. Furthermore, the upward revisions in projected operating earnings per share for 2025 and 2026 highlight an optimistic outlook driven by anticipated growth in net interest income (NII) and net interest margin (NIM).

Commerce Bancshares Inc has faced notable underperformance, with its stock lagging behind the KRE index by 12% year-to-date, leading to a valuation drop to historically low levels relative to its competitors. The bank is experiencing net interest margin (NIM) compression, which is primarily attributed to declining yields on cash and securities, resulting in lower expectations for net interest income (NII) and a 2% to 3% reduction in operating EPS projections for 2025 and 2026. Furthermore, challenges in the commercial real estate pipeline and increased pricing competition are contributing to expectations of weaker loan growth, further exacerbating the negative outlook for the bank's financial performance.