On Thursday, Barclays maintained its Equal-weight rating on KeyCorp (NYSE:KEY), with a steady price target of $16.00. The firm's recent analysis highlighted that KeyCorp's earnings per share (EPS) exceeded expectations. This performance was attributed to better-than-anticipated net interest income (NII) and controlled expenses, although fee-based revenues fell short of consensus estimates.
The report also noted that KeyCorp's results gained from a provision for credit losses that was lower than expected. However, there was a slight increase in nonperforming assets (NPAs), which rose by 2 basis points, and net charge-offs (NCOs) saw a significant jump of 24 basis points.
Despite the mixed financial indicators, KeyCorp has revised its 2024 fee income guidance upwards. The bank has decided to maintain its net interest income forecast, even in light of recent securities restructuring. Additionally, the bank has projected an increase in expenses.
Looking ahead, KeyCorp anticipates that its net interest margin (NIM) for the fourth quarter will rise by over 20 basis points. This expectation is set against the backdrop of the bank's recent financial performance and strategic financial management.
In other recent news, KeyCorp has been at the center of several significant developments. The firm adjusted its financial landscape by selling approximately $7 billion of low-yielding investment securities, a move expected to result in an after-tax loss of about $700 million for the third quarter of 2024.
Additionally, KeyCorp sold a nearly 15% minority stake to Scotiabank, a transaction projected to contribute approximately $400 million to KeyCorp's net interest income through 2025.
Analysts from Baird have downgraded KeyCorp's stock from Outperform to Neutral, lowering the price target to $17. On the other hand, Citi and Piper Sandler have maintained positive ratings, with Citi increasing its earnings per share (EPS) forecast for 2025 by $0.05 to $1.55. Piper Sandler has reaffirmed its Overweight rating, indicating confidence in the bank's future financial performance.
Jefferies, another financial firm, has increased its price target for KeyCorp shares to $19.00, maintaining a Buy rating. Meanwhile, Morgan Stanley anticipates a modest increase of 1% for 2025's EPS.
These are recent developments that provide insights into KeyCorp's current financial health and future prospects.
InvestingPro Insights
KeyCorp's financial landscape presents a mix of challenges and opportunities, as reflected in recent InvestingPro data. The company's P/E ratio of 22.87 suggests a relatively high valuation compared to earnings, which aligns with the Barclays' Equalweight rating. However, KeyCorp's dividend yield of 4.63% as of the latest data point is noteworthy, especially considering the InvestingPro Tip that the company has maintained dividend payments for 53 consecutive years. This consistent dividend history could be attractive to income-focused investors, particularly in light of the bank's mixed financial indicators mentioned in the article.
The company's recent performance is further contextualized by its impressive 1-year price total return of 69.3%, which corresponds with another InvestingPro Tip highlighting a large price uptick over the last six months. This positive price momentum, coupled with the bank's upward revision of its 2024 fee income guidance, may indicate investor confidence in KeyCorp's ability to navigate the current financial environment.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and insights. Currently, there are 8 more InvestingPro Tips available for KeyCorp, which could provide further depth to the financial picture presented in this article.
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