KeyCorp Closes Cain Brothers' Deal, Expands Health Advisory

KeyCorp KEY, through its corporate and investment banking unit, KeyBanc Capital Markets Inc., has completed the acquisition of Cain Brothers & Company, LLC. The deal, announced on Aug 15, 2017, was aimed at expanding the company’s existing healthcare investment banking.

New York-based Cain Brothers is a leading “healthcare focused investment banking and public finance firm.”

The move seems to be a good expansion strategy for KeyCorp as healthcare is one of the largest sectors in the United States and there is a growing need for distinctive capabilities. Also, the sector is expected to grow faster than the U.S. economy over the next several years, as healthcare is always a priority, irrespective of the economic environment.

Moreover, with this buyout, KeyCorp seems to be on track to become a leading corporate and investment bank. The deal should supplement KeyCorp's capabilities and leverage its network.

At the time of announcement of the deal, the co-head of Key Corporate Bank and President of KeyBanc Capital Markets, Randy Paine said, “This combination brings Key's expanded capabilities together with Cain Brothers' deep healthcare advisory and public finance practice, along with a shared client-focused culture embedded in each firm."

The transaction is expected to lead to further improvement in Keycorp’s investment banking revenues. For the six months ended Jun 30, 2017, the company witnessed a 55% year-over-year surge in investment banking and debt-placement fees.

Shares of KeyCorp have rallied 46.9% in a year’s time, outperforming the 37.5% growth for the industry it belongs to.

Currently, KeyCorp carries a Zacks Rank #3 (Hold).

A few better-ranked stocks from the finance space are The Toronto-Dominion Bank TD, M&T Bank Corporation MTB and Synovus Financial Corp. SNV.

Toronto-Dominion Bank has witnessed an upward earnings estimate revision of 11.2% for the current fiscal year over the past 60 days. Its share price has increased nearly 28.4% in the past year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

M&T Bank’s shares have gained more than 40% in a year’s time. Its Zacks Consensus Estimate for current-year earnings has been marginally revised upward in the last 60 days. It carries a Zacks Rank #2 (Buy).

Synovus Financial also carries a Zacks Rank #2. It witnessed a marginal upward earnings estimate revision for the current year, in the last 60 days. Its share price has surged 43.9% in the last 12 months.

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