UPDATE: Nomura Initiates Coverage on KeyCorp with Neutral Rating, $10 PT on Solid Loan Growth
In a report published Wednesday, Nomura initiated coverage on KeyCorp (NYSE: KEY) with a Neutral rating and $10.00 price target.
Nomura noted, “Initiating coverage with Neutral rating. We think KeyCorp is building for better long-term returns and deserves credit for solid loan growth; better NIM stability than most peers; and a peer-group best 10.2% Basel III T1C ratio. However, KEY‟s credit costs are already at "normalized" levels and expenses remain elevated, so near term EPS likely will not benefit from these levers. In 4Q12, KEY‟s ending loans were up 2.7% QoQ versus the peer group average of 1.8%, and its C&I loans were up 6%. We expect loan growth to once again be solid in 2013, and have baked in 6% growth in end of period loans. This growth should help to offset NIM pressure and allow NII to grow. We think KEY could remain a "show me" story on expenses until at least the second half of 2013.”
KeyCorp closed on Tuesday at $9.49.
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