On Friday, RBC Capital Markets adjusted their outlook on KeyCorp (NYSE:KEY), increasing the price target to $16 from the previous $15, while maintaining an Outperform rating on the stock. The firm anticipates a positive trajectory for the bank's net interest income (NII) over the coming six quarters.
The analyst from RBC Capital expressed confidence in KeyCorp's financial performance, noting that the net interest margin (NIM) likely hit its lowest point in the third quarter of 2023 and that the first quarter of 2024 should mark the low in net interest income. This sets the stage for an expected increase in NII in the subsequent quarters.
KeyCorp's approach to credit management was also highlighted as a point of strength. The analyst expects the company to continue its conservative credit management and to outperform in comparison to the last credit cycle. This is particularly relevant as investors are keeping a close watch on credit quality over the next 12 to 18 months.
Moreover, KeyCorp's capital position was underscored as a strong suit. With a common equity tier 1 (CET1) ratio reported at 10.3% in the first quarter of 2024, the firm is viewed as well-capitalized. RBC Capital projects that KeyCorp will likely increase capital returns later in the year and into 2025, further bolstering investor confidence.
InvestingPro Insights
KeyCorp's robust dividend history and the recent performance metrics provide a compelling picture for investors. The company has demonstrated a commitment to shareholder returns by raising its dividend for an impressive 13 consecutive years, an InvestingPro Tip that aligns with the positive outlook from RBC Capital Markets.
This commitment is further underlined by a substantial dividend yield of 5.7% as of the first quarter of 2024, significantly contributing to investor returns.
In terms of stock performance, KeyCorp has seen a large price uptick over the last six months with a total return of 40.55%, showcasing a strong upward trend in its share price. The market cap of $13.56B and a P/E ratio of 18.5 reflect the firm's market valuation and earnings potential. With the next earnings date set for July 18, 2024, investors will be keen to see if the positive trajectory highlighted by RBC Capital Markets continues to unfold.
For those interested in deeper analysis and additional insights, there are more InvestingPro Tips available at: https://www.investing.com/pro/KEY. To enhance your investing strategy with InvestingPro, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. Discover what other tips, such as analysts' profitability predictions for the year, could mean for KeyCorp's future performance.
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