CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:
We increase our target by $1 to $8, 6.6x our 2024 EPS estimate, below KEY’s five-year forward P/E average of 10.1x given a severely dampened earnings outlook. We increase our 2023 EPS estimate by $0.04 to $1.14 and raise 2024’s by $0.07 to $1.21. KEY posted Q3 EPS of $0.29 versus $0.55 a year ago, $0.02 above consensus. Net interest income (-6% Q/Q) continued its downward plunge with Q3 2023’s $923 million marking the lowest level in seven years. Given KEY is looking to increase capital (CET1 ratio jumped 50 bps to 9.8%), we saw loan balance drop 3%, with business loans (-4%) showing particular weakness. While interest rates surged in the quarter, KEY saw its AOCI losses rise 10% to $6.6 billion (81% of KEY’s tangible common equity). On the positive side, KEY is well positioned from a credit perspective, with just 0.7% of total loans in struggling commercial real estate office loans. We reiterate our Strong Sell opinion and continue to view KEY’s 70%+ (peers: 40% average) dividend payout ratio as a liability.