Commerce Bancshares (CBSH) Stock Forecast & Price Target

Commerce Bancshares Inc. shows a positive outlook due to robust financial performance, characterized by a 3% increase in tangible book value (TBV) and a 41 basis point rise in tangible common equity (TCE) alongside a strong return on assets (ROA) of 1.78% and return on tangible common equity (ROTCE) of 15.9%. The bank's loan growth of 3% quarter-over-quarter, coupled with expectations of continued growth in both loans and deposits in a low-to-mid single-digit range, indicates a solid pipeline, particularly in commercial and industrial (C&I) lending. Additionally, anticipated operational earnings per share (EPS) increases of 4%-5% for 2025 and 2026, driven by improved net interest income (NII) and net interest margin (NIM), further solidify a promising outlook for the company.

Commerce Bancshares Inc. has faced notable challenges, with its shares underperforming the KRE index by 12% year-to-date, leading to a depressed valuation, which is among its lowest levels in the past five years. The bank is experiencing net interest margin (NIM) compression, primarily due to declining yields on cash and securities, further exacerbated by a reduction in expected operating earnings per share for 2025 and 2026 by 2% to 3%. Additionally, there have been indications of softer performance in the commercial real estate pipeline amidst heightened pricing competition, contributing to concerns over the bank's ability to achieve meaningful loan growth and stability in the near term.