KeyBank
KEY
$21.70
-1.05%
KeyCorp is a bank holding company operating through its principal subsidiary, KeyBank, providing commercial and consumer banking, investment management, trust, and investment banking services across a 16-state footprint concentrated in Ohio, New York, and Washington. With roughly $190 billion in assets and about 17,900 employees, KeyCorp is a mid-sized regional bank distinguished by its hybrid community/corporate model, focused primarily on middle-market commercial clients rather than competing head-on with money-center giants or pure consumer lenders. The current investor narrative centers on a sharp earnings recovery: after reporting losses in the second half of 2024, KeyCorp has returned to consistent profitability with EPS climbing from $0.33 in Q1 2025 to $0.45 in Q1 2026, and net income rising from $405 million to $522 million over the same span. Debate now hinges on whether this earnings momentum can be sustained amid a challenging net interest margin environment, with interest expense still consuming a large share of interest income and the stock trading below its 52-week high despite a double-digit one-year gain.…
KEY
KeyBank
$21.70
Related headlines
Investment Opinion: Should I buy KEY Today?
The synthesized recommendation is a Hold with a constructive bias, reflecting a credible earnings recovery that is already substantially reflected in the stock price. The analyst consensus rating of 'buy' with a recommendation mean of 2.05 and an average target price of $26.02 implies 19.1% upside, which is meaningful but not compelling enough to justify aggressive accumulation given the stock's recent momentum breakdown. The core thesis is that KeyCorp offers a 4.66% dividend yield and a discounted 10.22x forward PE, but revenue growth of just 1.11% and negative recent free cash flow limit the upside until the top line accelerates.
Supporting evidence for the Hold rating includes the forward PE of 10.22x versus the trailing PE of 13.49x, which implies the market expects roughly 32% EPS growth to $2.45, a bar that requires sustained margin improvement. The five-quarter streak of sequential net income growth from $405 million to $522 million is genuinely impressive, and gross margin expansion from 59.53% to 67.41% shows operating leverage is materializing. However, the price-to-book ratio of 1.11x is mid-range historically, the ROE of 8.97% lags top-tier banks, and the 4.66% dividend yield with a 57.6% payout ratio limits internal capital generation. The 19.1% upside to the average target is attractive but the low target of $22.00 implies essentially no downside protection if the recovery stalls.
The biggest risks that could invalidate this thesis are a reversal in net interest margin improvement, a deterioration in credit quality that forces higher loan loss provisions, and a continuation of the negative relative strength trend that has seen the stock underperform SPY by 6.83% over three months. This Hold would upgrade to Buy if revenue growth accelerates above 3% year over year or if the stock pulls back toward $19-20, improving the risk/reward. It would downgrade to Sell if net interest margin compresses for two consecutive quarters or if free cash flow remains negative for another quarter. On balance, the stock appears fairly valued relative to its history and peers, with the 10.22x forward PE offering a modest discount that is justified by slower growth and lower profitability than leading regional banks.
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KEY 12-Month Price Forecast
KeyCorp presents a balanced risk/reward profile at the current price of $21.84, with the earnings recovery story credible but largely priced in. The 10.22x forward PE and 4.66% dividend yield offer valuation support, while the 19.1% upside to the average analyst target of $26.02 provides a reasonable return potential for income-oriented investors. However, the anemic 1.11% revenue growth and negative recent free cash flow suggest the recovery is fragile and dependent on continued margin improvement rather than business expansion. I would upgrade to bullish if revenue growth accelerates above 3% or if the stock pulls back toward $19-20, improving the risk/reward. I would downgrade to bearish if net interest margin compresses for two consecutive quarters or if credit quality deteriorates materially.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on KeyBank's 12-month outlook, with a consensus price target around $26.02 and implied upside of +19.9% versus the current price.
Average Target
$26.02
0 analysts
Implied Upside
+19.9%
vs. current price
Analyst Count
—
covering this stock
Price Range
$22 - $43
Analyst target range
KeyCorp is covered by 19 analysts, with a consensus recommendation of "buy" and a recommendation mean of 2.05 on a scale where lower numbers indicate stronger buys. The average target price is $26.02, implying approximately 19.1% upside from the current price of $21.84. The consensus leans bullish, supported by recent institutional ratings that show mostly Buy or Outperform ratings from firms including UBS, Wells Fargo, TD Cowen, DA Davidson, Evercore ISI, and RBC Capital, with only JP Morgan, Morgan Stanley, and Truist maintaining Neutral or Hold ratings. This distribution suggests analysts see the earnings recovery as credible but not without risks.
The target price range is wide, from a low of $22.00 to a high of $43.00, with the low target implying essentially no upside and the high target implying nearly 97% upside. The high target likely assumes significant multiple expansion, sustained earnings growth beyond current estimates, and possibly a more favorable interest rate environment that boosts net interest margin. The low target of $22.00, just 0.7% above the current price, prices in margin compression, slower loan growth, or a deterioration in credit quality. The wide spread signals high uncertainty among analysts, though the clustering of ratings in the Buy/Outperform camp and the recent reaffirmations of those ratings suggest that the bullish case currently has more conviction. With no recent downgrades and several reiterations of positive ratings, the analyst community appears to be holding a constructive view pending the next few quarters of earnings delivery.
Bulls vs Bears: KEY Investment Factors
The bull case rests on a credible five-quarter earnings recovery, a deeply discounted 10.22x forward PE, a 4.66% dividend yield, and 19% analyst target upside, while the bear case centers on anemic 1.11% revenue growth, negative recent free cash flow, and deteriorating short-term momentum. On balance, the bullish evidence is currently stronger because the earnings trajectory is confirmed by five consecutive quarters of sequential net income growth and margin expansion, and the valuation already embeds a pessimistic growth outlook. However, the single most important tension is whether the earnings recovery can be sustained without revenue acceleration — if net interest margin improvement stalls and the top line remains flat, the forward PE discount will prove justified rather than an opportunity. The stock's 90.7% positioning within its 52-week range and recent negative relative strength suggest the market is waiting for the next fundamental catalyst before committing to a breakout above $24.07.
Bullish
- Earnings recovery is real and accelerating: EPS has climbed from $0.33 in Q1 2025 to $0.45 in Q1 2026, with net income rising from $405 million to $522 million over the same period. This five-quarter streak of sequential improvement shows the bank has moved decisively past the loss-making quarters of 2024.
- Forward PE of 10.22x is deeply discounted: The stock trades at a trailing PE of 13.49x and a forward PE of just 10.22x, implying the market expects roughly 32% EPS growth to $2.45. This is a low absolute multiple for a bank that is demonstrating consistent earnings momentum.
- Analyst consensus sees 19% upside: 19 analysts rate KEY a 'buy' with a recommendation mean of 2.05 and an average target price of $26.02, implying 19.1% upside from $21.84. The high target of $43.00 suggests some analysts see substantial multiple expansion potential.
- Dividend yield of 4.66% with sustainable payout: The 4.66% dividend yield is well above the sector average, and the 57.6% payout ratio is sustainable given the bank's earnings base. This provides a strong income floor for total return even if price appreciation stalls.
Bearish
- Revenue growth is barely positive at 1.11%: Q1 2026 revenue of $2.728 billion grew just 1.11% year over year and declined sequentially from $2.860 billion in Q4 2025. The top line is essentially flat, meaning the earnings recovery is driven by cost and margin improvement rather than business expansion.
- Negative operating and free cash flow in latest quarter: The most recent quarter showed -$62 million in operating cash flow and -$74 million in free cash flow, driven by an $885 million working capital outflow and a $643 million increase in accounts receivable. This raises questions about the quality and sustainability of reported earnings.
- Momentum has broken down recently: The stock is down 4.59% over the past month and 3.79% over three months, with relative strength versus SPY at -3.53% and -6.83% respectively. This negative divergence suggests the recovery rally has stalled and the stock is in a corrective phase.
- Interest expense still consumes 39% of interest income: Interest expense of $783 million against interest income of $2.005 billion means funding costs still absorb a large share of revenue. If deposit competition intensifies or rates stay elevated, net interest margin could compress further.
KEY Technical Analysis
KeyCorp is in a broad recovery uptrend that has stalled in recent months. The stock is up 13.99% over the past year, but at $21.84 it sits roughly 90.7% of the way through its 52-week range of $16.47 to $24.07, meaning it is closer to its high than its low but has not made a fresh 52-week high since mid-July. That positioning suggests a stock that has already priced in much of its earnings recovery but lacks the momentum to break out to new highs, leaving it vulnerable to consolidation or a pullback toward the middle of its range.
Short-term momentum has clearly decelerated and diverged from the longer-term trend. While the stock is up 13.99% over 12 months and 15.56% over six months, it has declined 4.59% over the past month and 3.79% over three months, with the 1-month relative strength versus SPY at -3.53% and the 3-month relative strength at -6.83%. This negative divergence — a positive 1-year trend paired with negative 1- and 3-month performance — signals that the recovery rally has lost steam and the stock is in a corrective phase, potentially mean-reverting toward its 52-week midpoint rather than resuming its uptrend. The 6-month relative strength of just +0.16% versus SPY confirms that KeyCorp has essentially matched the market over the past two quarters despite its strong absolute gain.
Key technical levels are well defined by the 52-week range. Support sits near the 52-week low of $16.47, roughly 24.6% below the current price, while resistance is at the 52-week high of $24.07, about 10.2% above the current price. A breakout above $24.07 would signal renewed momentum and likely require a fundamental catalyst such as stronger net interest income or an improved rate outlook, while a breakdown below the recent consolidation zone around $21.50 could open the door to a deeper retracement toward the mid-to-high teens. With a beta of 1.023, KeyCorp's volatility is essentially in line with the broader market, meaning position sizing does not require a significant volatility adjustment, though the stock's max drawdown of -18.57% over the period shows it is capable of meaningful declines when sentiment shifts.
Beta
1.02
1.02x market volatility
Max Drawdown
-18.6%
Largest decline past year
52-Week Range
$16-$24
Price range past year
Annual Return
+15.2%
Cumulative gain past year
| Period | KEY Return | S&P 500 |
|---|---|---|
| 1m | -6.9% | -2.4% |
| 3m | -4.0% | +2.2% |
| 6m | +12.6% | +14.8% |
| 1y | +15.2% | +14.6% |
| ytd | +3.4% | +11.1% |
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KEY Fundamental Analysis
KeyCorp's revenue trajectory has been modestly positive but uneven. Q1 2026 revenue came in at $2.728 billion, up 1.11% year over year from $2.698 billion in Q1 2025, following a sequential path of $2.698B (Q1 2025), $2.797B (Q2 2025), $2.833B (Q3 2025), $2.860B (Q4 2025), and $2.728B (Q1 2026). The sequential decline from Q4 to Q1 is typical seasonality for a regional bank, but the low single-digit YoY growth rate indicates the top line is growing only slowly, with fee-based segments such as investment banking and debt placement ($294 million), trust and investment services ($290 million), and cards and payments ($171 million) providing diversification but not enough to drive rapid expansion. The investment case therefore rests more on margin and credit improvement than on revenue acceleration.
Profitability has improved materially from the loss-making quarters of 2024. Q1 2026 net income was $522 million with a net margin of 19.13%, up from $405 million and a 15.01% net margin in Q1 2025, and gross margin expanded from 59.53% to 67.41% over the same period. The quarterly progression of net income — $405M, $425M, $489M, $510M, $522M — shows five consecutive quarters of sequential improvement, and the operating margin of 25.70% in Q1 2026 is well above the 19.09% recorded a year earlier. This margin expansion reflects both cost discipline, with operating expenses declining to $1.138 billion from $1.091 billion a year ago despite higher revenue, and a lower interest expense burden as funding costs eased.
Balance sheet and cash flow metrics present a mixed picture. The debt-to-equity ratio of 0.54 is moderate for a regional bank, and ROE of 8.97% and ROA of 1.08% are respectable but not exceptional, reflecting the capital-intensive nature of banking. Free cash flow on a trailing twelve-month basis is $2.177 billion, but the most recent quarter showed negative operating cash flow of -$62 million and negative free cash flow of -$74 million, driven by a $885 million working capital outflow and $643 million increase in accounts receivable. The current ratio of 0.77 and a payout ratio of 57.6% with a 4.66% dividend yield mean the bank is returning substantial capital to shareholders, which is attractive for income investors but limits internal capital generation for growth or buybacks.
Quarterly Revenue
$2.7B
2026-03
Revenue YoY Growth
+1.1%
YoY Comparison
Gross Margin
67.4%
Latest Quarter
Free Cash Flow
$2.2B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is KEY Overvalued?
Because KeyCorp is profitable with positive net income, the PE ratio is the appropriate primary valuation metric. The stock trades at a trailing PE of 13.49x and a forward PE of 10.22x, with the gap between the two implying the market expects meaningful earnings growth — roughly 32% EPS expansion — over the next year, consistent with analyst estimates of $2.45 in forward EPS versus trailing EPS of $0.08 on a quarterly basis. The forward PE of 10.22x is low in absolute terms and suggests the market is either pricing in substantial earnings recovery or discounting the sustainability of current profitability.
Relative to the broader financial services sector, KeyCorp screens as a value play. The price-to-book ratio of 1.11x is modest for a regional bank, and the price-to-sales ratio of 2.02x is low compared to the sector's typical range. The dividend yield of 4.66% is well above the sector average, and the payout ratio of 57.6% is sustainable given the bank's earnings base. However, the PEG ratio of -0.023 is not meaningful due to the distorted trailing earnings base, and the EV/EBITDA of 13.92x is elevated for a bank, reflecting the capital-intensive nature of the business. On balance, the valuation appears to offer a discount to the market and to many peers, justified by slower growth and lower profitability relative to top-tier banks but supported by a strong dividend and improving earnings.
Historically, KeyCorp's valuation has been volatile. The PE ratio ranged from a low of 7.07x in Q2 2021 to a high of 111.46x in Q4 2023, with the current 13.49x sitting in the lower half of that historical band. The price-to-book ratio of 1.11x is above the 0.62x trough seen in Q2 2023 but below the 1.35x peak in Q1 2022, placing it in the middle of its multi-year range. This suggests the market is neither overly optimistic nor overly pessimistic about KeyCorp's prospects, and the current valuation could offer upside if earnings continue to recover and the bank sustains its margin improvement.
PE
13.5x
Latest Quarter
vs. Historical
High-End
5-Year PE Range 7x~14x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
13.9x
Enterprise Value Multiple
Investment Risk Disclosure
KeyCorp's financial risks center on its thin revenue growth and reliance on margin improvement rather than business expansion. Revenue grew just 1.11% year over year to $2.728 billion in Q1 2026 and declined sequentially from $2.860 billion in Q4 2025, meaning the earnings recovery is being driven almost entirely by cost discipline and lower funding costs. Interest expense of $783 million still consumes 39% of interest income of $2.005 billion, so any reversal in deposit pricing or a rise in funding costs would directly pressure net interest margin. Additionally, the most recent quarter showed negative operating cash flow of -$62 million and negative free cash flow of -$74 million, driven by an $885 million working capital outflow and a $643 million increase in accounts receivable, which raises questions about earnings quality and cash generation sustainability.
Market and competitive risks are meaningful for a mid-sized regional bank with a 16-state footprint concentrated in Ohio, New York, and Washington. The stock trades at a price-to-book ratio of 1.11x, which is above the 0.62x trough seen in Q2 2023 but below the 1.35x peak in Q1 2022, placing it in the middle of its historical range and leaving room for multiple compression if earnings disappoint. With a beta of 1.023, KeyCorp moves essentially in line with the broader market, so it offers no defensive diversification benefit during market downturns. The negative relative strength versus SPY over the past month (-3.53%) and three months (-6.83%) suggests the stock is already losing favor with investors, and the wide analyst target range of $22.00 to $43.00 signals significant disagreement about the bank's trajectory. Competitive pressure from larger money-center banks and fintech lenders in the middle-market commercial space could also limit KeyCorp's ability to accelerate revenue growth.
The worst-case scenario would involve a combination of net interest margin compression, a deterioration in credit quality, and a broader market selloff that compresses bank valuations. If revenue growth turns negative and the forward EPS estimate of $2.45 proves unreachable, the stock could retrace toward its 52-week low of $16.47, representing a decline of approximately 24.6% from the current price of $21.84. The analyst low target of $22.00 offers essentially no downside protection, and the stock's max drawdown of -18.57% over the observed period shows it is capable of meaningful declines when sentiment shifts. In a severe adverse scenario where credit losses spike and the dividend payout ratio of 57.6% comes under pressure, a decline to the mid-teens would represent a loss of roughly 25-30% from current levels.
FAQ
The most severe risk is net interest margin compression, as interest expense of $783 million still consumes 39% of interest income of $2.005 billion, and any reversal in funding cost relief would directly pressure profitability. The second risk is revenue stagnation, with Q1 2026 revenue growing just 1.11% year over year and declining sequentially from Q4 2025, meaning the earnings recovery is entirely dependent on cost and margin improvement. The third risk is credit quality deterioration, which could force higher loan loss provisions and erode the earnings base that supports the 57.6% dividend payout ratio. The fourth risk is momentum breakdown, with the stock down 4.59% over the past month and underperforming SPY by 6.83% over three months, suggesting investor sentiment is turning negative. These risks are ranked from most to least severe based on their potential impact on the investment thesis.
The 12-month forecast has three scenarios: a base case with 50% probability targeting $23-27, a bull case with 25% probability targeting $28-32, and a bear case with 25% probability targeting $16.50-20. The base case assumes EPS of $2.45 in line with consensus and revenue growth of 1-2%, consistent with the current trajectory. The bull case requires revenue acceleration above 3% and net interest margin expansion of 10+ basis points, while the bear case assumes margin compression and credit deterioration. The most likely scenario is the base case, with the key assumption being that net interest margin stabilizes and credit quality remains stable. The average analyst target of $26.02 aligns with the upper end of the base case range.
KEY appears fairly valued to modestly undervalued, trading at a trailing PE of 13.49x and a forward PE of 10.22x, with a price-to-book ratio of 1.11x. The forward PE discount implies the market expects roughly 32% EPS growth to $2.45, which is achievable given the five-quarter earnings recovery but not guaranteed. The price-to-book ratio of 1.11x sits in the middle of its multi-year range, above the 0.62x trough in Q2 2023 but below the 1.35x peak in Q1 2022. Compared to the broader financial services sector, the 4.66% dividend yield and 2.02x price-to-sales ratio screen as value-oriented, but the 8.97% ROE justifies a discount to top-tier banks. The market is pricing in continued earnings improvement but not aggressive multiple expansion.
KEY offers a mixed risk/reward profile at $21.84, with 19.1% upside to the average analyst target of $26.02 but limited downside protection given the low target of $22.00. The 10.22x forward PE and 4.66% dividend yield provide valuation support, and the five-quarter earnings recovery from $405 million to $522 million in net income is credible. However, revenue growth of just 1.11% year over year and negative recent free cash flow of -$74 million raise questions about the sustainability of the recovery. The stock is best suited for income-oriented investors willing to accept moderate volatility, and it would become a more compelling buy on a pullback toward $19-20 or if revenue growth accelerates above 3%.
KEY is better suited for medium-to-long-term investment with a minimum holding period of 12-18 months, given the gradual nature of its earnings recovery and the 4.66% dividend yield that rewards patience. The stock's beta of 1.023 means it moves in line with the market, so short-term trading would require accurate market timing without any volatility advantage. The 57.6% payout ratio and consistent dividend history make it appropriate for income-focused investors, while the 10.22x forward PE offers value appeal for patient investors. Short-term traders should note the negative relative strength over 1-month (-3.53%) and 3-month (-6.83%) periods, which suggest the stock lacks near-term momentum. A 12-18 month horizon allows time for the earnings recovery to either validate or invalidate the forward EPS estimate of $2.45.