PaineWebber Inc. cut its investment rating on KeyCorp Monday, citing the stock's substantial appreciation.

Banking industry analyst Ruchi Maden downgraded the Cleveland superregional company to "neutral" from "attractive" because its stock has "outperformed the group recently."

At the same time, she raised her stock price target to $83 a share from $76 but said "we do not believe our new target price has sufficient upside to warrant" a higher rating. KeyCorp's shares fell 18.75 cents, to $72.6875 on a day when bank stocks performed marginally.

The Standard & Poor's bank index rose 0.61%, and the Dow Jones industrial average fell 0.47%. The Nasdaq bank index climbed 0.93%; the S&P 500 fell 0.14%.

Ms. Maden pointed out that some of the stock's appreciation is due to KeyCorp's strong fundamentals, such as the company's retail marketing systems - which are "much further along than most of its competitors'."

However, takeover speculation has also been a driver, she said. In the past month, KeyCorp's shares have surged 14% while the S&P Bank Composite rose 6%.

Market experts pointed out that KeyCorp's market capitalization of $16 billion and its $70 billion-asset size leave few feasible suitors. Candidates could include First Union Corp., NationsBank Corp., U.S. Bancorp, and Banc One Corp.

If the company were to sell, there would be "little downside," added Ms. Maden. She estimated its takeout price at $95 a share.

Bank analyst Joseph C. Duwan of Keefe, Bruyette & Woods Inc. acknowledged that speculation had boosted KeyCorp's stock but added that the company's strong second- and third-quarter earnings had been a factor as well.

KeyCorp continues to trade at a discount relative to Keefe's bank index, said Mr. Duwan, who has maintained an "attractive" rating on the company for the past year. "The company also has become more cost-efficient by exiting lower growth businesses for higher growth" ones, he said.

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