KeyCorp: Time For A Pause

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About: KeyCorp (KEY)
by: Oguz Erkol
This article is exclusive for subscribers.
Oguz Erkol
Banks, long/short equity, portfolio strategy, medium-term horizon
Summary

KeyCorp has been our high conviction idea into 2017 among the regional lenders and has performed well for the past couple of years.

The increase in loan yields would be partly offset by rising interest expenses resulting from higher deposit betas and costly long-term debt.

The favorable expense and asset quality outlook is likely to be an earnings driver.

Despite seeing a double-digit EPS growth over the next two years, we think the shares are fairly valued for now and downgrade our rating to "neutral".

KeyCorp (NYSE:KEY) has been our high conviction idea into 2017 and has performed well for the past few years. The shares also slightly outperformed the financial sector ETF (NYSEARCA:XLF) on a