What happened
A Wall Street analyst lowered his price target on KeyCorp (KEY 0.62%), but was very upbeat about the company's prospects in doing so. Investors are focused on the positive, sending shares of KeyCorp up more than 3% on Tuesday.
So what
KeyCorp, the holding company for KeyBank, has been caught up in the turmoil caused by high-profile bank failures that happened earlier this year. The company's shares are down more than 40% year to date as investors fret about the health of midsize banks, as well as Key's struggles to adjust to rising interest rates.
There is no easy solution to these problems, but there is reason for long-term optimism. On Tuesday, Citigroup analyst Keith Horowitz lowered his price target on KeyCorp to $14, from $15, but kept a buy rating on the shares.
Horowitz wrote that "late-cycle valuations offer very attractive risk/reward" as banks prepare to announce second-quarter results. Bank of America expects to see more clarity both on interest rates and on regulatory reforms stemming from the failures in the second half of the year.
Now what
There are times as an investor when the macro environment simply makes it impossible for an individual company to outperform. Arguably, that's what is going on with KeyCorp right now. The combination of post-failure regulatory uncertainty and rising rates has created a lot of headwinds, and with all that is going on, it is hard to see its shares spiking higher right now.
But the company is a long-term survivor, with a solid business and the wherewithal to weather whatever comes its way in the near term. For those able to stomach volatility, this could be an attractive time to buy into KeyCorp.
