KeyCorp (KEY) is set to benefit from a regional banking sector rebound amid fading worst-case economic scenarios on the economy from US tariff policy, UBS said in a Tuesday report.

"We think regionals are ripe for a catch up," the report said. "We

upgrade KEY to Buy as we think it will be an outsized beneficiary of this bounce."

KeyCorp's capital strength, robust loan growth, potential for capital market recovery in H2, and scope for net interest income upsides could position the company for earnings upgrades and multiple expansions, according to the note.

UBS also raised its price target for the stock to $22 from $16.

Price: 18.45, Change: +0.16, Percent Change: +0.87