Written on Wed, 07/28/2010 - 12:27pm
By Amanda Smith
7/28/2010- Morgan Stanley analysts believe that KeyCorp (NYSE:KEY) will benefit from high asset sensitivity relative to peers, and proactive efforts taken to clean up its portfolio through accelerated loan loss recognition.
Analysts Betsy Graseck and Justin Kwong said, "KEY reported 2Q10 operating EPS of $0.06, +16c above our estimate and +17c better than consensus. Relative to our expectations, positives included lower provisions, higher revenues, lower operating costs, and a favorable tax rate. We are increasing our 2010 estimates by +34c from -$0.34 to $0.00, driven by lower loan loss provisions, and a reduced tax rate as the company realizes deferred tax assets (return to profitability & reserve releases). We are Equal-weight KEY, in the context of an Attractive view of the large cap banks."
Morgan Stanley maintained its equal-weight rating on the stock, with a $10 price target. The bank sees fiscal 2011 EPS of $0.33.
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