Baird Upgrades KeyCorp to Neutral Amid AI Concerns
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Feb 24 2026
0mins
Should l Buy KEY?
Source: seekingalpha
- Rating Upgrade: Baird upgraded KeyCorp (KEY) from Underperform to Neutral, indicating a more reasonable valuation following concerns over AI disruption, although it remains unattractive for new investments.
- Balanced Risk/Reward: With KeyCorp's stock trading at approximately 1.5x tangible book value, the analyst suggests a generally balanced risk/reward tradeoff, despite the stock slipping 1% on Tuesday amid overall weakness in bank stocks.
- Strong Capital Position: Baird's analyst highlighted that KeyCorp is in good shape from a capital perspective, has a clean credit profile, and a favorable capital markets outlook, with M&A optionality providing a floor for the stock.
- Market Reaction Insight: Despite the upgrade, Baird expressed surprise at the weakness in bank stocks, attributing it to fears of AI and large language model risks potentially leading to recession, while emphasizing that banks undergo annual stress tests, indicating no bubble in balance sheets.
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Analyst Views on KEY
Wall Street analysts forecast KEY stock price to rise
14 Analyst Rating
8 Buy
5 Hold
1 Sell
Moderate Buy
Current: 20.470
Low
18.00
Averages
23.00
High
25.00
Current: 20.470
Low
18.00
Averages
23.00
High
25.00
About KEY
KeyCorp is a bank-based financial services company, which operates through its subsidiary, KeyBank National Association (KeyBank). Through KeyBank and certain other subsidiaries, it provides a range of retail and commercial banking, commercial leasing, investment management, consumer finance, student loan refinancing, commercial mortgage servicing and special servicing, and investment banking products and services to individual, corporate, and institutional clients. Its segment includes Consumer Bank and Commercial Bank. The Consumer Bank serves individuals and small businesses by offering a variety of deposit and investment products, personal finance and financial wellness services, lending, student loan refinancing, mortgage and home equity, credit card, treasury services, and others. The Commercial Bank consists of the Commercial and Institutional operating segments. The Commercial operating segment is focused on serving the borrowing, cash management, and capital markets.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Inflation Data Surprises: January's Producer Price Index (PPI) rose 0.5% month-over-month, exceeding expectations of 0.3%, with the core component increasing by 0.8%, indicating limited room for the Federal Reserve to cut interest rates and heightening concerns about a potential economic slowdown.
- Rising Credit Risks: A Bank of America strategist highlighted increasing problem loans that could pressure lenders, prompting investors to reassess credit risks in private credit and leveraged loan markets, which negatively impacts valuations of banks sensitive to economic cycles.
- Regional Bank Stocks Decline: KeyCorp (NYSE:KEY) fell 5.6%, First Merchants (NASDAQ:FRME) dropped 5.3%, Fifth Third Bancorp (NASDAQ:FITB) decreased by 5.9%, FB Financial (NYSE:FBK) declined 5.8%, and Cathay General Bancorp (NASDAQ:CATY) also fell 5.8%, reflecting waning investor confidence in regional banks.
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- Sales Breakdown Performance: Scrubwear sales jumped 35.1% to $154.9 million, while non-scrubwear sales rose 26.4% to $47 million, indicating the success of the company's diversified product strategy.
- International Market Expansion: Figs' international revenue soared 55.1% to $37.7 million, reflecting the effectiveness of its global expansion strategy, which is expected to drive future growth.
- Optimistic Future Outlook: Figs anticipates full-year revenue growth of 10% to 12% for 2026 and plans to increase its adjusted EBITDA margin from 11.8% in 2025 to 12.8%, demonstrating confidence in its future performance.
See More
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- Significant Sales Growth: Figs' fourth-quarter revenue surged 33% year-over-year to $201.9 million, with Scrubwear sales jumping 35.1% to $154.9 million and non-scrubwear sales increasing 26.4% to $47 million, indicating strong demand in the healthcare apparel market.
- Strong Regional Performance: U.S. revenue rose 28.7% to $164.2 million, while international revenue soared 55.1% to $37.7 million, demonstrating Figs' rapidly increasing market penetration among healthcare professionals globally.
- Improved Profitability: Figs' EBITDA climbed 26.8% to $26.7 million, with projections for an adjusted EBITDA margin of 12.8% in 2026, up from 11.8% in 2025, reflecting ongoing enhancements in the company's profitability.
- Optimistic Investment Outlook: Analysts at KeyBanc set a $17 price target for Figs' shares, indicating a potential 10% return from Friday's closing price, showcasing market confidence in the company's future growth prospects.
See More
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- Stock Performance: In Friday trading, KeyCorp's 5.650% Fixed Rate Perpetual Non-Cumulative Preferred Stock (Symbol: KEY.PRJ) is down about 2%, while the common shares (Symbol: KEY) are down about 6%, indicating the preferred stock's relative resilience compared to common stock.
- Dividend History: The dividend history chart for KEY.PRJ illustrates the historical dividend payments, reflecting its stability and attractiveness as a fixed-income investment, particularly during market volatility.
- Market Reaction: The preferred stock's decline is less severe than that of the common stock, suggesting ongoing demand from investors, likely due to the fixed income characteristics appealing to those seeking stable returns.
- Investor Sentiment: Despite the overall market downturn, KEY.PRJ remains in focus, with investors potentially viewing it as a defensive choice in asset allocation, especially amid increasing economic uncertainty.
See More
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- Upgrade Announcement: Baird upgraded KeyCorp (NYSE:KEY) from Underperform to Neutral, maintaining a price target of $19, reflecting a valuation correction following the recent selloff in regional bank stocks due to AI concerns, indicating a gradual recovery in market confidence towards the stock.
- Strong Financial Performance: KeyCorp reported earnings of $0.43 per share for Q4 2025, with revenue exceeding $2 billion and a 12% year-over-year increase, while expenses rose only 2%, demonstrating effective cost control and surpassing earlier targets for net interest margin and income.
- Stock Buyback Plan: The company repurchased $200 million of common stock during the quarter, doubling its original plan, and aims to accelerate buybacks with at least $300 million expected in Q1 2026, reflecting confidence in future cash flows and commitment to shareholders.
- Strategic Expansion: KeyCorp expanded its frontline banker workforce by nearly 10% and invested an additional $100 million in technology, launching a new mass affluent wealth platform that has added 54,000 new households since 2023, showcasing ongoing efforts to enhance customer experience and market competitiveness.
See More
Activists Intensify Pressure on Underperforming Stocks: Caution for Long-Term Investors.
- Whirlpool's Stock Decline: Whirlpool's stock is experiencing a significant decline, raising concerns among investors.
- Activist Pressure: David Tepper, a major investor, is joining other activists in urging the company to improve its financial performance.
See More
