On Friday, RBC Capital Markets updated its outlook on KeyCorp (NYSE:KEY) shares, increasing the price target to $17 from the previous $16 while maintaining an Outperform rating. The revision follows what is identified as a pivotal second quarter for the company in 2024, which marked a turning point for its net interest income (NII) and net interest margin.
The analyst from RBC Capital Markets expressed confidence in KeyCorp's performance, anticipating continued growth in the second half of 2024 and extending through 2025. The growth is expected to be supported by the company's investment banking division, which is likely to contribute to an increase in fee revenue.
KeyCorp's conservative credit management was also highlighted as a factor that could lead to a stronger performance compared to the previous credit cycle. The bank's current Common Equity Tier 1 (CET 1) ratio stands at a healthy 10.5%. This robust capital position is expected to enable KeyCorp to return more capital to shareholders later in the year and into 2025.
In other recent news, KeyCorp has seen several developments that could impact investors. DA Davidson has increased KeyCorp's price target to $18.00 from $16.00, maintaining a Buy rating on the stock.
This adjustment considers KeyCorp's outlook for Net Interest Income (NII) in 2024, which despite weaker loan performance, expects a decline of 2 to 5 percent. Furthermore, KeyCorp has forecasted an increase of 10 percent or more in NII for the fourth quarter of 2024, intending to exceed $1 billion.
In the upcoming Federal Reserve stress tests, KeyCorp, alongside other major U.S. banks, is expected to maintain ample capital reserves while being conservative with shareholder payouts. Piper Sandler, following a meeting with KeyCorp's management, reaffirmed its Overweight rating on the company's stock, indicating a positive outlook.
KeyCorp has also declared dividends for the second quarter of 2024 across its common and preferred stock categories, including a cash dividend of $0.205 per common share.
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