Barclays Maintains an 'Underweight' on KeyCorp (KEY); 1Q11 EPS Follow-up: Credit the Provision
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Price: $21.87 +0.09%
Rating Summary:
22 Buy, 16 Hold, 2 Sell
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Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
22 Buy, 16 Hold, 2 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Barclays maintains an 'Underweight' on KeyCorp (NYSE: KEY), PT $9.
Barclays analyst says, "KEY's recent strong earnings growth and return to profitability (4th straight quarter) have been primarily reserve release driven (2 straight quarters of provision credits). While its reported ROA of 1.32% appears sound, excluding one-time items and using a 0.60% provision/loan ratio, it is closer to 0.75%. With its exit portfolio/discontinued ops equaling 15% of average earning assets (23% of loans), and securities at 28% of earning assets (up from 11% just 7 quarters ago), coupled with an expectation for further balance sheet contraction and net interest margin (NIM) pressure, it could have difficultly improving these core metrics in the near term. Still, we view its capital position as sound (T1C of 10.7%) and it is trading at roughly tangible book."
"We are maintaining our 2011 EPS forecast of $0.75, as 1Q's beat is offset by expected NIM and balance sheet contraction looking out. Given these expectations, we are reducing our 2012 EPS estimate to $0.95 from $1.00. As its stands, we believe the Durbin amendment could reduce KEY's annual earnings by $0.07 beginning in 2H11."
For more ratings news on KeyCorp click here and for the rating history of KeyCorp click here.
Shares of KeyCorp closed at $8.59 yesterday.
Barclays analyst says, "KEY's recent strong earnings growth and return to profitability (4th straight quarter) have been primarily reserve release driven (2 straight quarters of provision credits). While its reported ROA of 1.32% appears sound, excluding one-time items and using a 0.60% provision/loan ratio, it is closer to 0.75%. With its exit portfolio/discontinued ops equaling 15% of average earning assets (23% of loans), and securities at 28% of earning assets (up from 11% just 7 quarters ago), coupled with an expectation for further balance sheet contraction and net interest margin (NIM) pressure, it could have difficultly improving these core metrics in the near term. Still, we view its capital position as sound (T1C of 10.7%) and it is trading at roughly tangible book."
"We are maintaining our 2011 EPS forecast of $0.75, as 1Q's beat is offset by expected NIM and balance sheet contraction looking out. Given these expectations, we are reducing our 2012 EPS estimate to $0.95 from $1.00. As its stands, we believe the Durbin amendment could reduce KEY's annual earnings by $0.07 beginning in 2H11."
For more ratings news on KeyCorp click here and for the rating history of KeyCorp click here.
Shares of KeyCorp closed at $8.59 yesterday.
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