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On Tuesday, Piper Sandler confirmed its Overweight rating on KeyCorp (NYSE:KEY) with a steady price target of $18.00. The financial institution recently presented at an industry conference where it discussed various topics, including expected net interest income (NII), investment banking (IB) revenues, and the effects of a balance sheet repositioning that had been previously announced.
The firm indicated that KeyCorp's third quarter projections for 2024 include a slightly lower NII than initially estimated, although the IB revenues are looking more favorable. KeyCorp's management also reiterated their fourth quarter 2024 NII goal of over $1 billion, which does not account for the impact of balance sheet restructuring. This target is contingent upon the condition that there will not be more than two rate cuts, as additional cuts could lead to further pressure.
For the year 2025, the bank's management anticipates a significant increase in NII, estimating a rise of approximately 20% compared to the figures projected for 2024. This outlook is based on current financial trends and the strategic steps the company has undertaken.
KeyCorp's commentary at the industry conference provided investors with insights into the company's financial trajectory and strategic plans. The reaffirmation of the Overweight rating and price target by Piper Sandler reflects a positive outlook on the bank's future financial performance.
In other recent news, KeyCorp has made significant strategic moves in reshaping its financial landscape. The company has offloaded approximately $7 billion worth of low-yielding investment securities, a decision that is expected to result in an after-tax loss of about $700 million for the third quarter of 2024. In addition to this, KeyCorp recently sold a nearly 15% minority stake to Scotiabank, a transaction that analysts from Jefferies and Piper Sandler anticipate will contribute approximately $400 million to KeyCorp's net interest income through 2025.
Furthermore, Jefferies has set earnings per share (EPS) estimates for KeyCorp at $1.08 for 2024 and $1.65 for 2025, while Piper Sandler expects a low single-digit accretion to the EPS for 2025. On the other hand, Morgan Stanley anticipates a modest increase of 1% for 2025's EPS. These recent developments have led to several adjustments from financial firms, with Jefferies increasing its price target for KeyCorp shares to $19.00 and maintaining a Buy rating, while Piper Sandler reaffirmed its Overweight rating on KeyCorp.
InvestingPro Insights
KeyCorp's strategic financial management and projections for the near future are further illuminated by real-time data from InvestingPro. With a market capitalization of $15.02 billion and a dividend yield of 5.07%, the company stands out as a potential income-generating investment. Notably, KeyCorp has maintained dividend payments for an impressive 53 consecutive years, underlining a commitment to returning value to shareholders.
InvestingPro data also reveals a Price/Earnings (P/E) ratio of 21.33, which adjusts to a slightly more favorable 19.45 when looking at the last twelve months as of Q2 2024. While the company's revenue growth has seen a decline of 10.07% over the same period, the strength of its share price is evident with a one-year total return of 52.43%, indicating robust performance in the market.
Investors considering KeyCorp's potential should note that InvestingPro offers additional insights, with analysts predicting the company will be profitable this year, which aligns with the management's positive outlook for 2025. For those seeking a deeper analysis, InvestingPro provides a range of tips, with two additional tips available that could further guide investment decisions.
As the financial landscape evolves, staying informed with up-to-date metrics and expert tips from InvestingPro (https://www.investing.com/pro/KEY) can be invaluable for investors looking to make the most of opportunities like those presented by KeyCorp.
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