KeyCorp (KEY) Delivers Strong Performance Amid Market Uncertainty
Overview of KeyCorp’s Operations
KeyCorp (KEY), based in Cleveland, Ohio, is the parent company of KeyBank National Association. With a market capitalization of $19 billion, it offers a variety of financial services, including retail banking, commercial leasing, investment management, consumer finance, and investment banking for individual, corporate, and institutional clients.
Remarkable Market Gains
Over the past year, KEY has significantly outperformed the broader market. The stock surged 75.6%, while the S&P 500 Index ($SPX) rose by nearly 35.7%. This trend has continued into 2024, with KEY up 32.3% year-to-date, outpacing the SPX’s 25.5% increase.
When compared to the iShares U.S. Regional Banks ETF (IAT), KEY’s outperformance is evident. IAT has gained approximately 64.1% in the last year, but KEY’s year-to-date returns of 32.3% surpass the ETF’s 30.9% gains.
Factors Behind KEY’s Performance
The recent success of KEY can be attributed to various factors, including increased adjusted non-interest income, higher net interest income (NII), and lower expenses. A boost in deposit balances also contributed positively. Key areas of income growth include trust and investment services, commercial mortgage servicing fees, and investment banking and debt placement fees.
Q3 Results and Market Reactions
On October 17, KEY experienced a decline of more than 2% following the release of its Q3 results. Revenue fell 55.6% year-over-year to $695 million, although the company’s adjusted earnings per share (EPS) of $0.30 exceeded the consensus estimate of $0.27, marking a 3.4% increase from the previous year.
For the fiscal year ending in December, analysts project a 12.9% decline in EPS to $1.08 on a diluted basis. KEY’s history of earnings surprises is mixed; it exceeded expectations in three of the last four quarters but fell short on one occasion.
Expert Ratings and Analysts’ Opinions
Among the 18 analysts covering KEY stock, the consensus rating is “Moderate Buy.” This includes seven “Strong Buy” ratings, two “Moderate Buys,” and nine “Holds.” However, this outlook is less optimistic than in the previous month, where nine analysts recommended a “Strong Buy.”
On November 7, Citigroup Inc. (C) analyst Keith Horowitz downgraded KEY to “Neutral” with a target price of $19. Currently, KEY trades above its average target of $18.79, while a higher price target of $20 from analysts indicates a potential upside of 5%.
On the date of publication, Neha Panjwani did not hold (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. For more information, please view the Barchart Disclosure Policy here.
The views expressed in this article are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
