NEW YORK (TheStreet) -- KeyCorp (KEY) - Get Report stock is rising 0.84% to $13.20 in after-hours trading on Monday after it was upgraded to "buy" from "hold" at Jefferies this morning before the market open.
The firm also increased its price target by 50 cents to $15.50 because of the stock's low valuation.
KeyCorp is comfortable as a standalone company, but could see its annual earnings increase by more than 5 cents per share after it completes the $4.1 billion acquisition of First Niagara FinancialGroup (FNFG), Jefferies said in an analyst note.
"Even modest synergies could add a few extra cents, providing potential earnings per share upside," analysts added.
The acquisition, which was announced in October, is expected to close in the third quarter of 2016.
On its own, KeyCorp, a retail and commercial banking company, continues to deliver steady loans and fees growth, as well as control over its spending, analysts said.
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 multiple 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 1.1%. 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.
- After a year of stock price fluctuations, the net result is that KEY's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. 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.