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Deutsche Bank Downgrades KeyCorp (KEY) to Hold, Exposed to Higher RMBS Prepays/Lower Reinvestment Rates

October 8, 2012 7:05 AM EDT Send to a Friend
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Price: $13.18 --0%

Rating Summary:
    10 Buy, 16 Hold, 1 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 22 | Down: 15 | New: 28
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Deutsche Bank downgraded KeyCorp (NYSE: KEY) from Buy to Hold with a price target of $9.00.

"EPS should benefit from the recently announced cost savings plan, Basel 3 capital is the highest among peers, and the stock trades at 0.95x tangible book. However, KEY is among the most exposed to higher RMBS prepays/lower reinvestment rates and may be more exposed to C&I pricing pressures given more C&I concentration and its focus on larger loans (the area we expect to experience the most pricing pressure)," analyst Matt O'Connor comments. "While KEY has more leverage to declining funding costs vs. peers (deposit rates are 20bps higher and other borrowing costs are 40bps higher - see p. 29), we think this is already in estimates. Lastly, there’s little benefit from strong mortgage as KEY doesn’t originate them."

For an analyst ratings summary and ratings history on KeyCorp click here. For more ratings news on KeyCorp click here.

Shares of KeyCorp closed at $8.88 yesterday.




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