KeyCorp (NYSE:KEY) Running Out of Earnings Catalysts?

While KeyCorp (NYSE:KEY) has had some strong earnings growth recently, it has mostly come from its reserve release. Barclays says they now need to prove they can pull other earnings levers going forward.

Barclays said, "KeyCorp's recent strong earnings growth and return to profitability has been primarily reserve release driven, as credit quality continues to improve. However, with a provision/loans ratio (0.72% at 3Q) already approaching its "normalized" target (NCO of 40-50bps), KEY needs to show it has other earnings levers to pull...We look for KEY to point to a continuation of its improving asset quality trends, reiterate its expectations for loan balances to continue declining over the next several quarters, and speak to its expected progress on its "Keyvolution" expense saving initiatives.

"Still, this marks its first earning call since Beth Mooney was named CEO (effective May 1). With credit quality on the mend, we expect investors to shift their attention to growth, a feat that has remained elusive in the past. At some point, we expect Mooney to outline an updated vision and goals."

Barclays maintains an "Underweight" on KeyCorp, which closed Tuesday at $8.68, up $0.02, or 0.23 percent, Barclays has a price target of $9 on the company.