Compass Point reiterated a Buy rating and $17.50 price target on KeyCorp (NYSE: KEY) following the company's 3Q15 earnings results. KEY reported operating EPS of $0.27/sh which was a penny below consensus estimates. The earnings miss was due to higher compensation expense and a higher than expected provision.

Analyst Jesus Bueno commented, "We reiterate our Buy rating and maintain our $17.50 PT following the 3Q15 earnings release. KEY reported operating EPS of $0.27/sh which was a penny below our $0.28/sh estimate. The earnings miss was due to higher compensation expense and a higher than expected provision. Despite the elevated expenses, the compensation expense was due in part to the hiring of loan officers which should benefit loan growth in 2016. KEY has managed to generate operating leverage in a difficult environment as the bank continues to manage its cost base while expanding its fee revenue streams. The bank's large commercial swap book also offers some protection against lower rates, and masks KEY's potential to increase its asset sensitivity by letting the swaps roll off, which we feel the market currently places little value on. While net interest income growth will be challenging without higher rates, we expect that the bank will continue to grow fee revenue and manage its efficiency ratio down to near 60% over the next several years. KEY remains one of a handful of names in the regional bank space with the ability to generate positive operating leverage and double digit earnings growth without the need for higher rates. The bank also screens as cheap compared to peers while boasting one of the highest combined payout ratios among its peers. We raise our 4Q15E EPS estimate to $0.29 from $0.27 to account for better investment banking results and maintain our FY15E EPS estimate of $1.10. We also raise our FY16E EPS estimate to $1.26 from $1.22 in order to account for stronger loan growth. We also introduce our FY17E EPS estimate of $1.45."

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 $13.31 yesterday.