June 23, 2008 / 11:33 AM / 11 years ago

UPDATE 1-Ladenburg's Bove upgrades KeyCorp to neutral

(Recasts, adds details)

June 23 (Reuters) - Ladenburg Thalmann analyst Richard Bove upgraded KeyCorp (KEY.N) to “neutral” from “sell,” saying the stock was selling below the bank’s liquidation value, but forecast a loss for 2008.

Earlier this month, the company raised $1.65 billion to bolster its capital base, and said an adverse federal court ruling on the taxation of leveraged-lease transactions would lead to a $1.1 billion to $1.2 billion charge in the second quarter.

Bove, who cut his price target on the U.S. Midwest regional bank to $12 from $19, said the company’s tangible book value, taking into account the expected second-quarter loss and the capital raise, is $15.19 per share.

“This number is reasonably strong since there are no estimates suggesting that the company will lose money in the second half this year or into 2009,” Bove wrote in a note to clients.

Bove now expects the company to post a loss of $1.39 per share in 2008, compared with his prior expectations of a profit of $1.88 a share.

He also cut his 2009 and 2010 profit expectations to $1.44 and $1.79 per share, from his previous view of $2.08 and $2.36 respectively.

KeyCorp has $64.7 billion in deposits worth $9.7 billion and has $1.1 billion in non-performing assets that suggests the company is worth $8.6 billion, or 53.5 percent above its market capitalization, Bove said.

KeyCorp shares, which have lost more than half of their value so far this year, closed at $11.53 Friday on the New York Stock Exchange. (Reporting by Esha Dey in Bangalore; Editing by Deepak Kannan)

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