On Friday, an analyst at Argus adjusted the price target for KeyCorp (NYSE: NYSE:KEY), increasing it to $16 from the previous $15, while reiterating a Buy rating for the stock. The revision follows KeyCorp's first-quarter earnings report, which was disclosed on Sunday, April 17, 2024.
The financial services company reported adjusted earnings of $0.22 per diluted share for the first quarter of 2024, a decrease from the $0.30 reported in the same quarter of the previous year and slightly below the consensus estimate of $0.23. Despite the earnings dip, the company's management has maintained its guidance for net interest income, expecting a decrease of 2%-5% for the year, with a 5%-7% decline anticipated in average loans.
KeyCorp's performance in the first quarter saw a 3% reduction in average loans, while average deposits remained stable. The Argus analyst highlighted the stock's valuation, noting that KeyCorp shares are trading at 12.4 times the firm's 2024 earnings per share estimate, which is below the historical average for the company.
The analyst's optimism is partly based on the expectation that higher deposit costs, which have been affecting the bank, will start to decrease as the year progresses toward mid-2024. Additionally, KeyCorp's current dividend yield, which stands at approximately 5.7%, was cited as an attractive feature for investors. The increase in the price target reflects a positive outlook on the bank's ability to navigate the financial headwinds it faces.
InvestingPro Insights
Following the recent analyst update on KeyCorp (NYSE: KEY), InvestingPro provides additional context to the bank's financial standing and future prospects. With a market cap of $13.56 billion and a P/E ratio of 18.5, KeyCorp presents an interesting case for investors. Notably, its dividend yield stands at a robust 5.7%, as of the ex-date for the last dividend payment on February 26, 2024. This aligns with the Argus analyst's mention of KeyCorp's appealing dividend yield.
InvestingPro Tips reveal two critical aspects that investors should consider. Firstly, KeyCorp has demonstrated a commitment to shareholder returns, having raised its dividend for 13 consecutive years. Secondly, the stock has experienced a large price uptick over the last six months, with a total return of 40.55%. These metrics underscore the company's resilience and potential for growth, despite the downward revisions in earnings by some analysts.
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