KeyCorp stock target cut to $21 at Keefe Bruyette & Woods

Published 22/01/2025, 14:30
KeyCorp stock target cut to $21 at Keefe Bruyette & Woods

On Wednesday, Keefe, Bruyette & Woods analyst David Konrad adjusted the price target for KeyCorp (NYSE:KEY) shares, reducing it to $21 from the previous $22, while maintaining an Outperform rating on the stock. The revision follows KeyCorp's announcement of its financial guidance, which included a balance sheet restructuring in the last quarter of 2024 and a subsequent earnings report.

In his analysis, Konrad acknowledged that KeyCorp's recent guide had heightened market expectations, particularly after the company reported a $0.02 net interest income (NII) beat for the quarter. Despite the positive NII figure, which management confidently stands by, Konrad expressed reservations about the fee income guide. He suggested that it appears conservative and likely indicates a slight year-over-year decline in investment banking revenues. InvestingPro data reveals several additional insights about KeyCorp's performance, with 6 more exclusive ProTips available to subscribers.

Konrad's revised estimates for KeyCorp include a 20% growth in NII, a 7% increase in fees, and a 4% rise in expenses. He argues that the market's reaction to KeyCorp's guidance, which resulted in a 4.8% decline in the stock price, was an overreaction.

The analyst remains optimistic about KeyCorp's future earnings potential. He believes that a $2.00 exit rate for earnings power in the second half of 2026 is within reach for the company. This projection is based on the growth rates he has outlined and the performance indicators from the recent financial reports.

Investors and market watchers will continue to monitor KeyCorp's stock performance and financial outcomes, especially as the company works towards achieving the earnings power target mentioned by Konrad for the latter half of 2026.

In other recent news, KeyCorp reported a mixed performance for the fourth quarter, with earnings exceeding expectations, but revenue falling short of projections. The financial services company posted adjusted earnings per share of $0.38, surpassing the analyst consensus of $0.33. However, revenue stood at $865 million, significantly below Wall Street's forecast of $1.74 billion. KeyCorp's net interest income rose 10% quarter-over-quarter to $1.06 billion, benefiting from higher interest rates, and fees from its investment banking, payments, and wealth management businesses increased 27% year-over-year.

Despite these positive trends, KeyCorp recorded a net loss from continuing operations attributable to common shareholders of $279 million, or $0.28 per diluted share. This included $657 million, or $0.66 per share, of after-tax charges related to the loss on sale of securities. On a brighter note, net loan charge-offs decreased 26% quarter-over-quarter, and criticized loans declined 7%, signaling some improvement in credit quality.

Looking forward, CEO Chris Gorman expressed confidence in KeyCorp's positioning for 2025, highlighting the bank's strong performance momentum and leading capital position. These recent developments underscore KeyCorp's mixed financial performance and its strategic plans for the future.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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