Jefferies has commenced coverage on KeyCorp (KEY, Financial), assigning a Hold rating and setting a price target of $18. This move is part of the firm's broader analysis of 32 regional and mid-cap banks, which it views with a positive outlook. Despite uncertainties like tariffs, banks are positioned to benefit from several factors. These include potential growth in loan activities due to the U.S. steering clear of a recession, widening net interest margins from a steeper yield curve, stable credit metrics, surplus capital to adapt strategies, and appealing valuations. KeyCorp is among those banks being monitored closely under this new coverage.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 18 analysts, the average target price for KeyCorp (KEY, Financial) is $17.70 with a high estimate of $20.00 and a low estimate of $15.50. The average target implies an upside of 8.66% from the current price of $16.29. More detailed estimate data can be found on the KeyCorp (KEY) Forecast page.
Based on the consensus recommendation from 23 brokerage firms, KeyCorp's (KEY, Financial) average brokerage recommendation is currently 2.3, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for KeyCorp (KEY, Financial) in one year is $15.66, suggesting a downside of 3.87% from the current price of $16.29. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the KeyCorp (KEY) Summary page.
KEY Key Business Developments
Release Date: April 17, 2025
- Revenue: Up 16% year-over-year.
- Earnings Per Share (EPS): $0.33 for the first quarter.
- Net Interest Income: $1.1 billion, up 4% sequentially and 25% year-over-year.
- Noninterest Income: Increased 3% year-over-year.
- Provision for Credit Losses: $118 million, including $110 million of net charge-offs and an $8 million reserve build.
- CET1 Ratio: 11.8%.
- Tangible Book Value Per Share: Increased roughly 26% year-over-year.
- Average Loans: $105 billion on a period-end basis, up about $0.5 billion.
- Commercial Loans: Up $1.2 billion sequentially.
- Deposits: Up mid-single digits year-over-year; household relationships up 2%.
- Investment Banking Fees: Record for the first quarter, up 3% year-over-year.
- Net Charge-Offs: $110 million, down 4% sequentially.
- Nonperforming Loans: Down 9% sequentially.
- Net Interest Margin (NIM): Increased 17 basis points to 2.58%.
- Share Repurchase Authorization: $1 billion, expected to commence in the second half of the year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- KeyCorp (KEY, Financial) reported a 16% increase in revenues year-over-year, with expenses remaining flat, indicating strong financial performance.
- The company achieved a pre-provision net revenue increase of over $90 million from the previous quarter.
- KeyCorp (KEY) ended the quarter with a CET1 ratio of 11.8%, positioning it at the high end of its peer group.
- The company reported record first-quarter investment banking fees, with pipelines remaining at historically elevated levels.
- KeyCorp (KEY) announced a $1 billion share repurchase authorization, expected to commence in the second half of the year, reflecting confidence in its financial position.
Negative Points
- The macroeconomic environment remains uncertain, with inflation and geopolitical risks potentially impacting client sentiment and market conditions.
- KeyCorp (KEY) noted a pause in transactional activity from clients due to recent tariff announcements and market uncertainty.
- The company is performing a name-by-name review of its largest clients to assess exposure to tariffs, indicating potential risks in its loan portfolio.
- Despite strong performance, KeyCorp (KEY) acknowledged that future charge-offs will depend on the path of the economy, reflecting ongoing credit risk concerns.
- The company expects expenses to increase throughout the year due to investment spend, salary increases, and other personnel costs, which could impact profitability.
