KEY: Future Revenue Momentum Will Reflect Capital Strength Amid Activist And Sector Tailwinds

Analysts have modestly increased their fair value estimate for KeyCorp, lifting the implied price target by about $0.70 to reflect slightly stronger projected revenue growth, improved profitability, and sustained capital and credit strength highlighted in recent research.

Analyst Commentary

Street research on KeyCorp reflects a generally constructive stance, with most recent price target revisions still implying upside from current levels despite modest recalibrations. Analysts emphasize that valuation remains supported by earnings resilience, solid capital ratios, and prospects for revenue acceleration into 2025 and 2026.

Bullish Takeaways

Bullish analysts highlight that even with modest target changes, most price objectives still sit comfortably above the current share price, suggesting room for multiple expansion as earnings visibility improves.
Recent quarters are characterized as strong, with revenue guidance moving higher and management expressing confidence that current revenue momentum can extend into 2026, supporting a growth and re-rating narrative.
Capital levels are cited as being at the high end of regional peers, which is viewed as a buffer for credit normalization and a potential source of incremental shareholder returns over time.
Improving sentiment toward regional banks, supported by deregulation themes and better capital markets activity, is seen as a tailwind for KeyCorp, particularly if loan growth and net interest margin trends stabilize or improve.

Bearish Takeaways

Bearish analysts or more cautious voices note that part of the positive revenue outlook is already embedded in consensus estimates, limiting near-term upside from guidance beats.
Some of the recent target revisions include slight downward adjustments, reflecting concerns that the sector rally may have run ahead of fundamental estimate revisions.
There is caution that broader regional bank enthusiasm tied to M&A and deregulation could prove uneven, raising execution risk if KeyCorp underperforms peers on loan growth or margin recovery.
Investors are reminded that while credit quality is currently strong, any deterioration from still favorable levels, combined with slower-than-expected operating leverage, could cap valuation at the lower end of historical ranges.

What's in the News

HoldCo Asset Management has escalated its activist campaign, urging KeyCorp to adopt a no acquisition policy, channel all excess capital into share repurchases, and dismiss CEO Christopher Gorman and several directors over alleged value destruction tied to the 2016 First Niagara deal, while signaling it may pursue a proxy contest or push for a sale to larger banks (Key Developments).
KeyCorp responded to HoldCo by reiterating its focus on disciplined growth and capital return strategies. The company emphasized its intent to drive shareholder value while resisting pressure for a wholesale strategic overhaul or immediate sale discussions (Key Developments).
In a subsequent communication, CEO Chris Gorman stated that KeyCorp is not considering a takeover and is uninterested in bank M&As, though it may evaluate non bank combinations. This pushed back on HoldCo's campaign for a strict no acquisitions stance (Key Developments).
Recent buyback disclosures show that from July 1, 2025 to September 30, 2025, KeyCorp repurchased no shares under its March 2025 authorization. This underscores a gap between current capital deployment and activist calls for aggressive repurchases (Key Developments).
KeyCorp reported third quarter 2025 net loan charge offs of $114 million, or 0.42% of average loans, an improvement from $154 million, or 0.58%, in the third quarter of 2024. This supports the narrative of stabilizing credit costs (Key Developments).

Valuation Changes

Fair Value Estimate: risen slightly from $21.51 to $22.22 per share, reflecting a modestly higher long term outlook.
Discount Rate: edged down from 7.26% to 7.19%, indicating a marginally lower assumed risk profile or cost of equity.
Revenue Growth: increased slightly from 16.76% to 16.84%, incorporating a small uplift in long term growth expectations.
Net Profit Margin: improved modestly from 28.89% to 29.06%, signaling a slightly stronger profitability outlook.
Future P/E: moved up from 10.28x to 10.52x, implying a marginally higher valuation multiple on forward earnings.

Shift from net interest income headwinds to tailwinds and strategic deposit cost management expected to enhance revenue growth and profitability.
Expansion in wealth management and commercial payments, alongside strong growth in commercial loan servicing, poised to drive noninterest income and earnings stability.
Deteriorating asset quality, regulatory pressures, and challenges in loan demand and investment banking sectors indicate potential profitability and growth issues for KeyCorp.

Catalysts

About KeyCorp

Operates as the holding company for KeyBank National Association that provides various retail and commercial banking products and services in the United States.What are the underlying business or industry changes driving this perspective?

The anticipated shift from net interest income (NII) headwinds to tailwinds due to a pivot in fixed asset repricing and the structure of swap and treasury maturities, expected to significantly enhance NII in the forthcoming quarters, impacting revenue growth positively.
Improved deposit costs dynamics, with a more stable increase in deposit costs and a strategic focus on high-value consumer and commercial deposits, aiming to fortify net interest margins and overall profitability.
Expansion in the wealth management and commercial payments sectors, marked by record production volumes and significant client growth, poised to drive noninterest income upwards, influencing both revenue and net margins positively.
Strong growth in the national third-party commercial loan servicing business, providing a counter-cyclical revenue stream and insights into the commercial real estate market, which could bolster diversified revenue streams and enhance earnings stability.
Persistent discipline in pricing and cost control amidst the evolving economic and interest rate landscape to maintain and potentially improve net margins, thereby supporting earnings growth even in a tepid loan demand environment.

Assumptions

How have these above catalysts been quantified?

Analysts are assuming KeyCorp's revenue will grow by 10.5% annually over the next 3 years.
Analysts assume that profit margins will increase from 12.5% today to 31.0% in 3 years time.
Analysts expect earnings to reach $2.4 billion (and earnings per share of $1.74) by about October 2027, up from $716.0 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 14.0x on those 2027 earnings, down from 22.7x today. This future PE is greater than the current PE for the US Banks industry at 11.9x.
Analysts expect the number of shares outstanding to grow by 14.11% per year for the next 3 years.
To value all of this in today's dollars, we will use a discount rate of 6.99%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

The decline in earnings per share from the previous year and an increase in nonperforming loans could indicate potential issues with asset quality and profitability.
Lower than expected loan demand and competitive pricing environment could lead to lower interest income and pressure on net interest margins.
The preliminary stress capital buffer increase suggested by the Fed's stress test results could imply higher capital requirements, potentially impacting the company's ability to distribute capital to shareholders or invest in growth opportunities.
Tepid loan demand and the impact of higher funding costs could pressure net interest income, despite growth in deposits and controlled expenses.
Risks associated with investment banking and commercial real estate markets could affect noninterest income and loan quality, impacting earnings and capital ratios.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $19.86 for KeyCorp based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $43.0, and the most bearish reporting a price target of just $16.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2027, revenues will be $7.7 billion, earnings will come to $2.4 billion, and it would be trading on a PE ratio of 14.0x, assuming you use a discount rate of 7.0%.
Given the current share price of $17.49, the analyst's price target of $19.86 is 12.0% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

KEY: Strong Capital Levels And Credit Quality Will Drive Outperformance Through 2026