Valued at a market cap of $29.1 billion, State Street Corporation (STT) provides a range of financial products and services to institutional investors. The Boston, Massachusetts-based company’s customers include providers of mutual funds, managers of collective investment funds and other investment pools, providers of corporate and public retirement plans, insurance companies, foundations, endowments, and investment managers.
Shares of this financial services company have outpaced the broader market over the past 52 weeks. STT has rallied 38.7% over this time frame, while the broader S&P 500 Index ($SPX) has gained 22.3%. However, on a YTD basis, the stock is up 1%, lagging behind SPX’s 4% rise.
Narrowing the focus, State Street has outperformed the Financial Select Sector SPDR Fund’s (XLF) 32.5% return over the past 52 weeks but has underperformed XLF’s 7.2% gain on a YTD basis.
On Feb. 3, shares of STT closed down 3.4% after Vanguard Group announced fee reductions across dozens of its mutual funds and ETFs. Shares of other asset-managing companies, including Blackrock (BLK) and Invesco (IVZ), also retreated following the news.
Moreover, on Jan. 17, State Street’s shares plunged nearly 2.9% after its Q4 earnings release despite delivering stronger-than-expected Q4 adjusted earnings of $2.60 per share, which grew 27.4% from the year-ago quarter and revenues of $3.4 billion, which advanced 12.2% year-over-year. Robust growth in fee revenues and higher net interest income (NII) aided the results.
However, what disappointed the investors was the company’s weak 2025 outlook. For fiscal 2025, the company expects NII to be roughly flat and fee income to grow 3-5%, compared to a 5.9% rise in NII and a 6.3% growth in adjusted fee income in fiscal 2024.
For the current fiscal year, ending in December, analysts expect STT’s EPS to grow 11.3% year over year to $9.65. The company’s earnings surprise history is promising. It beat the Wall Street estimates in each of the last four quarters.
Among the 17 analysts covering the stock, the consensus rating is a “Moderate Buy,” which is based on eight “Strong Buy,” one “Moderate Buy,” seven “Hold,” and one “Moderate Sell” rating.
This configuration is slightly more bullish than three months ago, with seven analysts suggesting a “Strong Buy” rating.
On Jan. 22, Argus maintained a “Buy” rating on STT and raised its price target to $115, which indicates a 16% potential upside from the current levels.
The mean price target of $112.57 represents a 13.5% upside from State Street’s current price levels, while the Street-high price target of $138 suggests an upside potential of 39.2%.
On the date of publication, Neharika Jain did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.More news from Barchart
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