Goldman Sachs Reiterates Buy Rating on KeyCorp (KEY)
Goldman Sachs analyst Ryan Nash reiterated a Buy rating and $19.00 price target on KeyCorp (NYSE: KEY).
The analyst comments "High level thoughts on earnings: KEY reported 3Q24 EPS of ($0.47). Adjusting for one-time items ($918mn securities and $6mn FDIC reversal) we peg core EPS at $0.30, slightly above Visible Alpha Consensus Data of $0.28 with the slight beat driven by lower core expenses ($1.10bn vs. $1.12bn expected). Core PPNR was higher than expected ($513mn vs. $496mn) with expenses coming in lower while NII was better ($952mn vs. $938mn consensus), which offset weaker core fees of $649mn (vs. consensus of $664mn). The beat in NII was driven by higher AEA ($171.99bn vs. consensus of $170.28bn) as an increase in cash (from BNS investment) offset the decline in avg. loans ($106.2bn vs. consensus of $107.3bn) while NIM came in a touch lower than expected at 2.17% (cons. of 2.20%). Avg deposits were up +2.5% to $147.77bn, +1.9% vs. expectations while EOP DDA deposits increased by 0.9% QoQ bringing the mix to 20.2% (19.1% expected). Within its margin, loan yields increased +7bps QoQ to 5.73% (5.73% expected), securities yields increased +45bps QoQ to 2.87% (3.07% expected) driven by the securities portfolio restructuring, and IB deposit costs increased +11bps QoQ to 2.96% (2.88% expected). The provision was lower than expected at $95mn ($104mn cons) while net charge offs of ~0.58bps were worse than 38bps expected (had pointed to upper end of its 30-40bps NCO guide). Criticized loans declined +2% QoQ and represent 6.5% of total loans while NPLs increased by 2.5% to 0.69% (0.39% in 3Q23, 0.66% in 2Q24). TBVPS grew +15.8% to $11.72, while in capital CET1 grew +30bps to 10.8% and adj CET1 grew ~90bps QoQ to ~8.6%. Lastly, KEY updated its FY24 guidance which reiterated avg loans down (EOP lower vs. prior), higher fees, higher expenses, reiterated NII and moved NCO expectations to the top end of the range (as expected). If we assume toward the lower end of its NII guide (-4%), fees slightly above the guide (+6.5%) and in-line expenses, we come up with implied 4Q24 PPNR well below street expectations as higher fees are more than offset by higher expenses."
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 $17.70 yesterday.