Analyst Keith Horowitz upgraded the stock to buy from neutral. His price target of $20 implies the stock has an upside of 68.6% from where it closed Friday.
Horowitz said bank stocks could face challenges due to higher interest rates or be at risk of bank runs. But KeyCorp could benefit from asset repricing and is considered a strong bank when looking at the average size of deposits. "KEY made some mistakes, but they represent near-term headwinds and we found they have the largest benefit from repricing of fixed rate assets which will benefit 2024 and 2025 earnings," he said in a Monday note to clients. The stock surged 7.
A large share of uninsured deposits can actually be among the most valuable to a bank, he said, because they are core operating commercial accounts. Instead, he said investors should look at the average account size for uninsured deposits because it shows a stark contrast in larger regionals compared with Silicon Valley. This metric shows a stark contrast in the large regional banks Citi covers, he said.
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