KeyCorp (KEY) Stock Rating Downgraded at Deutsche Bank
NEW YORK (TheStreet) -- KeyCorp (KEY) - Get Report stock was downgraded to "hold" from "buy" at Deutsche Bank on Monday.
The Cleveland-based regional bank was downgraded in part over concerns about its proposed acquisition of First Niagara Financial Group (FNFG), the firm said.
"There are risks associated with the FNFG deal-namely, disruption from large cost take outs, potential unknown regulatory/control challenges and more tangible book dilution (of 12%) than we would have preferred given the lower quality of the FNFG franchise," Deutsche Bank said.
The firm lowered its price target on the stock to $14 from $16.
KeyCorp stock is down by 1.87% to $13.14 in early afternoon trading on Monday.
Separately, TheStreet Ratings team rates KEYCORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
We rate KEYCORP (KEY) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income and expanding profit margins. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- KEY's revenue growth has slightly outpaced the industry average of 0.4%. Since the same quarter one year prior, revenues slightly increased by 7.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- KEYCORP has improved earnings per share by 13.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, KEYCORP increased its bottom line by earning $1.04 versus $0.93 in the prior year. This year, the market expects an improvement in earnings ($1.08 versus $1.04).
- The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Commercial Banks industry average. The net income increased by 17.7% when compared to the same quarter one year prior, going from $186.00 million to $219.00 million.
- The gross profit margin for KEYCORP is currently very high, coming in at 89.83%. Regardless of KEY's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 19.36% trails the industry average.
- In its most recent trading session, KEY has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
- You can view the full analysis from the report here: KEY
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.