Morgan Stanley analyst Manan Gosalia maintained a Hold rating on KeyCorp (KEY – Research Report) today and set a price target of $17.00.
Manan Gosalia’s rating is based on KeyCorp’s ability to maintain its net interest income (NII) guidance despite macroeconomic uncertainties. The company has reaffirmed its guidance for a 20% year-over-year NII growth, supported by several factors such as the benefits from a previous investment in Scotiabank, the maturation of low-yield fixed-rate securities, and positive loan trends. Additionally, KeyCorp’s balance sheet is positioned neutrally to short-term interest rate changes, and the company has limited incremental funding requirements for commercial and industrial loan growth due to the runoff of consumer loans.
Despite these positive indicators, Gosalia maintains a Hold rating due to potential risks that could impact KeyCorp’s financial performance. These risks include a rate shock combined with lower and flatter rates, a significant pullback in commercial and industrial growth, and a decline in core deposits. Furthermore, while the fee guidance remains unchanged with expectations of a recovery in investment banking fees, the macroeconomic environment poses downside risks. Thus, the Hold rating reflects a balanced view of the company’s strengths and the uncertainties it faces.
In another report released today, Barclays also maintained a Hold rating on the stock with a $20.00 price target.
Based on the recent corporate insider activity of 38 insiders, corporate insider sentiment is neutral on the stock.