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KBW downgrades KeyCorp to 'market perform'


Sandler O'Neill & Partners analyst Aaron Deer upgraded Wilmington, N.C.-based Live Oak Bancshares Inc.'s stock rating to "buy" from "hold," and set a price target of $18.

The analyst wrote that on Dec. 12, the bank's shares dropped nearly 18% following an announced change in its hold-versus-sell strategy on SBA loans and sharp downward revisions to analyst estimates.

The analyst saw this market reaction as overdone and wrote that the optics of the earnings reduction is not good, pushing out earnings by a couple of years, "but not only will this result in a very strong earnings ramp, it also improves the quality of earnings, as gain-on-sale income will represent a much smaller percentage of revenue under the new strategy."


Mike Rizvanovic of Macquarie Research upgraded Toronto-based Royal Bank of Canada's stock rating to "outperform" from "neutral."

The analyst expects the bank to outpace peers in the lending business in Canada in fiscal year 2019, because of its superior deposit base that is expected to lead to better margin expansion.

The analyst maintained the bank's stock price target of C$104.


Rizvanovic also downgraded Bank of Montreal's stock rating to "neutral" from "outperform," based on a "more challenging margin outlook for the bank's US business" which will restrict the bank's growth in fiscal year 2019.

The analyst also lowered the bank's stock price target to C$101 from C$111.


Keefe Bruyette & Woods analyst Brian Klock lowered Dallas-based Comerica Inc.'s stock rating to "market perform" from "outperform."

The analyst found the bank's revenue and earnings growth to be "largely dependent upon future Fed funds hikes." The analyst expects loan growth and demand deposit account retention to be headwinds in the near future.

The analyst also lowered Comerica's stock price target to $87 from $110.


Klock also lowered Cleveland-based KeyCorp's stock rating to "market perform" from "outperform."

The analyst wrote that KeyCorp could execute on further expense save initiatives in 2019, however, there is risk to the analyst's revenue growth assumptions for 2019.

The analyst also lowered KeyCorp's stock price target to $19.50 from $23.