KeyCorp (KEY): Despite Beat, Revenue And Cost Synergies Still Not In The Numbers - Wedbush
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Wedbush analyst, Peter Winter, reiterated his Outperform rating on shares of KeyCorp (NYSE: KEY) and raised his price target to $16 from $15 after the company reported EPS of $0.16 from continuing operations, including $0.14 in merger charges for First Niagara (FNFG). The merger closed on August 1 and Core EPS of $0.30 beat the analyst's EPS estimate and consensus of $0.26. The $0.04 beat was driven by a lower tax rate ($0.02 benefit) and lower non-interest expenses ($0.02 benefit).
KEY is confident it will exceed its cost savings target of $400 million, resulting in a 300 bp improvement in the efficiency ratio and 200 bp increase in ROTCE. Not included in the analyst's forecast is the potential to realize $300 million in revenue synergies, incurring roughly $100 million in costs to implement. This will take 3 to 5 years to be at full run-rate.
Shares of KeyCorp closed at $13.87 yesterday.
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