Baird Upgrades KeyCorp (KEY) after Decline in Regional Bank Stocks

KeyCorp (NYSE:KEY) is included among the 14 Best GARP Stocks to Buy According to Analysts.

On February 24, Baird upgraded KeyCorp (NYSE:KEY) to Neutral from Underperform and kept its price target at $19. The firm said the upgrade reflects valuation following the previous day’s selloff. Regional bank stocks declined amid concerns tied to AI. The analyst noted that fears intensified after a blog post published over the weekend. Baird said the scenarios described in the post, including 11% unemployment and possible credit stress tied to a weaker US consumer, “seem excessive.”

The firm pointed out that KeyCorp shares trade at about 1.5-times tangible book value. At that level, it sees a “generally balanced risk/reward trade-off.” Baird also said banks are more likely to benefit from AI over time rather than face “meaningful disruption.”

During the Q4 2025 earnings call, Chairman, President, and CEO Christopher Gorman reported earnings of $0.43 per share. He said revenue exceeded $2 billion and increased 12% year-over-year on an adjusted basis. Expenses rose by just 2%. He also noted that both net interest margin and net interest income came in above the company’s earlier targets. Gorman pointed to improving asset quality during the quarter. He highlighted declines in net charge-offs, nonperforming assets, criticized loans, and delinquencies.

He said the company repurchased $200 million of common stock during the period. This was twice the original plan. He added that KeyCorp plans to accelerate buybacks, with at least $300 million in repurchases expected in the first quarter of 2026 and similar levels planned throughout the year. He described 2025 as a year of meaningful progress and said the company met or exceeded all previously stated financial goals.

On the strategic side, Gorman said the company expanded its frontline banker workforce by nearly 10%. This included hiring across wealth management, commercial payments, middle market banking, and investment banking. He also said the company invested an additional $100 million in technology, focusing on tools designed to improve customer experience.

He noted the launch of a mass affluent wealth platform. Since 2023, the platform has added 54,000 new households. Gorman also announced the nomination of two new board members, Tony DeSpirito and Chris Henson. He said there would be a leadership change in the lead independent director role, with Sandy Cutler stepping down and Todd Vasos assuming the position.

KeyCorp (NYSE:KEY) is a bank-based financial services company. It operates through its primary subsidiary, KeyBank National Association.

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