Barclays Maintains an 'Underweight' on KeyCorp (KEY); 3Q11 EPS Preview: Is it Approaching a Loan Growth Inflection Point?
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Price: $21.87 --0%
Rating Summary:
22 Buy, 16 Hold, 2 Sell
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Today's Overall Ratings:
Up: 6 | Down: 7 | New: 77
Rating Summary:
22 Buy, 16 Hold, 2 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 6 | Down: 7 | New: 77
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Barclays maintains an 'Underweight' on KeyCorp (NYSE: KEY) price target of $9.00.
Barclays analyst says, "We expect KEY to report 3Q11 EPS of $0.20 versus the $0.21 consensus. Our below consensus expectation is likely driven by our higher loan loss provision estimate, as we believe it's unlikely for its recent string of negative provisions (three consecutive quarters) to last indefinitely. Still, we continue to expect KEY to post a moderate reserve release (7th straight quarter)."
"KEY's recent strong earnings growth and return to profitability (5 straight quarters) have been primarily reserve release driven (3 straight quarters of negative provisions). While its 2Q11 reported ROA of 1.23% appeared sound, using a more normalized 0.60% provision/loan ratio it was closer to 0.77%. With its exit portfolio/discontinued ops at 15% of average earning assets and securities at 26% (up from 11% just 8 quarters ago) along with expectations for NIM pressure and balance sheet stability, its core profitability metrics are unlikely to improve near-term. With that said, its capital position is strong (T1C of 11.1%), it's trading below tangible book ($8.90), and it believes it may be moving closer to a loan growth inflection point."
For more ratings news on KeyCorp click here and for the rating history of KeyCorp click here.
Shares of KeyCorp closed at $6.55 yesterday.
Barclays analyst says, "We expect KEY to report 3Q11 EPS of $0.20 versus the $0.21 consensus. Our below consensus expectation is likely driven by our higher loan loss provision estimate, as we believe it's unlikely for its recent string of negative provisions (three consecutive quarters) to last indefinitely. Still, we continue to expect KEY to post a moderate reserve release (7th straight quarter)."
"KEY's recent strong earnings growth and return to profitability (5 straight quarters) have been primarily reserve release driven (3 straight quarters of negative provisions). While its 2Q11 reported ROA of 1.23% appeared sound, using a more normalized 0.60% provision/loan ratio it was closer to 0.77%. With its exit portfolio/discontinued ops at 15% of average earning assets and securities at 26% (up from 11% just 8 quarters ago) along with expectations for NIM pressure and balance sheet stability, its core profitability metrics are unlikely to improve near-term. With that said, its capital position is strong (T1C of 11.1%), it's trading below tangible book ($8.90), and it believes it may be moving closer to a loan growth inflection point."
For more ratings news on KeyCorp click here and for the rating history of KeyCorp click here.
Shares of KeyCorp closed at $6.55 yesterday.
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