Barron's Gets Bullish on KeyCorp (KEY)

Despite a massive sell-off in the financial sector today, shares of KeyCorp (NYSE: KEY) are only down a penny on the back of a positive Barron's article. Published in this weekend's edition of the paper, the article touts KeyCorp as now having "solid capital ratios along with a healthy banking network and deposit base."

KeyCorp currently is trading at just 0.5x tangible book value of about $12.50, much lower than the average price-to-tangible-book ratio of about 1x for similarly-operated banks. One analyst from T. Rowe Price cited in the article said KeyCorp is unfairly getting "lumped in with some other Ohio and Michigan banks trading at depressed levels". The Barron's article points out that KeyCorp has drastically improved its Tier 1 ratio to a solid 10.8%, all while undertaking initiatives to raise capital in anticipation of absorbing further loan losses.

Further, Barron's likes that KeyCorp has been paring its exposure to some of the most sensitive areas of the economy, specifically credit cards and auto loans. The article also notes KeyCorp's now-great move to sell its subprime arm in '06.

KeyCorp operates as the holding company for KeyBank National Association that provides various banking services to individual, corporate, and institutional clients in the United States.

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