KeyCorp (KEY): Exploring Valuation After a Wave of Analyst Upgrades and Consecutive Earnings Surprises

KeyCorp (KEY) is in the spotlight after a series of analyst upgrades and positive commentaries that have highlighted growing confidence in the bank’s financial prospects. The company has surpassed earnings expectations for two consecutive quarters, which has prompted renewed investor interest.

See our latest analysis for KeyCorp.

After a flurry of upbeat analyst commentary and strong quarterly earnings, KeyCorp’s share price has been steadily building momentum. It currently trades at $18.54. Notably, its 1-year total shareholder return stands at 15.8 percent, suggesting renewed optimism among investors and highlighting an improving long-term trend.

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With shares trading below some analyst targets and the bank extending its streak of earnings surprises, the big question is whether KeyCorp is still undervalued or if the market is already anticipating its future growth. Could there be more upside, or has all the good news been priced in?

Most Popular Narrative: 14.3% Undervalued

KeyCorp recently closed at $18.54, while the prevailing narrative sets a fair value at $21.62 per share. This suggests the market may be underestimating KeyCorp’s growth catalysts. This insight is fueling bullish sentiment from market-watchers.

The anticipated shift from net interest income (NII) headwinds to tailwinds is due to a pivot in fixed asset repricing and the structure of swap and treasury maturities. This is expected to significantly enhance NII in the forthcoming quarters, positively impacting revenue growth. Improved deposit cost dynamics, with a more stable increase in deposit costs and a strategic focus on high-value consumer and commercial deposits, are aimed at fortifying net interest margins and overall profitability.

Read the complete narrative.

Want to know what’s supercharging this higher valuation? The narrative is packed with bold financial predictions, including rapid top line growth and a significant surge in profit margins. Curious about the numbers that could reshape future earnings and the market’s current assumptions? See which financial forecasts are driving this target and how they compare to the market’s expectations.

Result: Fair Value of $21.62 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent risks such as rising nonperforming loans or disappointing loan demand could challenge KeyCorp’s improving narrative and weigh on future profitability.

Find out about the key risks to this KeyCorp narrative.

Build Your Own KeyCorp Narrative

If our take doesn’t quite align with your view or you’re eager to dig into the numbers yourself, you can craft your own story from scratch in just minutes. Do it your way

A great starting point for your KeyCorp research is our analysis highlighting 2 key rewards and 4 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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