Zacks Investment Research downgraded shares of KeyCorp (KEY) from OUTPERFORM to NEUTRAL on January 02, 2013, with a target price of $8.75.
We are downgrading our recommendation on KeyCorp to Neutral based on constant pressure on net interest margin (NIM). However, KeyCorp's third quarter earnings marginally surpassed the Zacks Consensus Estimate. Better-than-expected results were aided by improved non-interest income as well as net interest income, continued improvement in credit quality and robust capital ratios. However, these positives were partially offset by rising operating expenses. We expect the company's business restructuring actions to continue to fuel its credit quality and liquidity. Though the company's capital deployment plan highlights its sound capital position, we remain wary of the persisting slow economic recovery, stringent regulatory restrictions and the low interest rate scenario. Nevertheless, we are optimistic on the company's strong balance sheet and improved market share.
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