Shares of KeyCorp ( KEY) of Cleveland closed at $8.97 Monday, trading just below tangible book value and for 10.4 times the consensus 2013 EPS estimate of 86 cents. The consensus 2014 EPS estimate is 93 cents. The shares returned 12% during 2012, following a 12% decline in 2011. Based on a quarterly payout of a nickel, the shares have a dividend yield of 2.23%. KeyCorp will announce its fourth-quarter results on Jan. 23, with analysts expecting a profit of 21 cents a share, down from 23 cents in the third quarter, but increasing from 20 cents in the fourth quarter of 2011. KBW analyst Brian Klock rates KeyCorp "Underperform," with an $8.00 price target, and estimates the company will report fourth-quarter earnings of 20 cents a share, with a 2013 EPS estimate of 80 cents and a 2014 EPS estimate of 90 cents. The analyst said on Dec. 12 that although "KEY has some levers to protect the net interest margin (NIM) in 2013, in the form of high-cost CDs and growth in the credit card book, we believe consensus provision and expense levels are too low." The provision he refers to is the quarterly provision for loan losses, which lowers earnings. Regarding the stock's valuation, Klock said "we believe the NIM protection and capital deployment catalysts are already priced in the stock and we believe that incremental operating leverage will be a challenge to achieve," and that "we believe the shares will underperform the large regional peer group as consensus estimates come down to our estimates, resulting in downward pressure on the shares." Guggenheim analyst Terry McEvoy on Wednesday upgraded KeyCorp to "Outperform" to "Perform," with a price target of $11.00, saying that "Under the guidance of a relatively new CEO, KeyCorp has moved away from an old strategy of trying to be all things to all people to one focused on specific geographic markets and industry sectors. This new strategy should create a less volatile, lower-risk revenue stream, and we are already starting to see positive trends within Key's corporate banking business." McEvoy said that he expects tan expanded fourth-quarter net interest margin and plans to return capital to investors after the next round of Federal Reserve stress tests are completed in March, to be "catalysts for the stock." The analyst expects KeyCorp to report fourth-quarter earnings of 23 cents a share, and that the company will earn 90 cents a share in 2013. KeyCorp's shares were down 1% on Wednesday, closing at $8.90. KEY data by YCharts
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