Financial services company KeyCorp (KEY) recently announced the sale of its indirect retail auto loan portfolio to a wholly-owned subsidiary of Waterfall Asset Management, LLC. The financial terms of the deal have been kept under wraps. The company has also entered into an accelerated share repurchase program.
Following the news, shares of the company appreciated marginally to close at $19.95 in extended trade on Friday.
The company’s indirect retail auto loan portfolio was valued at $3.2 billion. Post the sale, the company purchased senior notes worth $2.8 billion from a securitization collateralized by the sold loans.
Meanwhile, the company will repurchase shares worth $585 million of its outstanding common stock. Initially, KeyCorp will receive the delivery of about 23.5 million common stock shares on September 14, 2021, at $19.87 (the closing price of the common stock on September 10, 2021). This represents about 2.5% of the number of shares of common stock outstanding.
The CFO of KeyCorp, Don Kimble, said, “The ASR transaction, which was aided by the capital generated from the sale of the indirect retail auto loan portfolio, further demonstrates our commitment to maximizing shareholder value.” (See KeyCorp stock chart on TipRanks)
Last month, Robert W. Baird analyst David George reiterated a Hold rating on the stock with a price target of $21. The analyst’s price target implies upside potential of 5.7% from current levels.
The Wall Street community is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 3 Buys and 6 Holds. The average KeyCorp price target of $23.93 implies that the stock has upside potential of 20.4% from current levels. Shares have gained about 55.1% over the past year.
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