State Street Corporation Sees Mixed Performance Amid Market Changes

Valued at a market cap of $29.1 billion, State Street Corporation (STT) specializes in a variety of financial products and services aimed at institutional investors. Based in Boston, Massachusetts, the company caters to a broad clientele, including mutual fund providers, collective investment managers, corporate and public retirement plan managers, insurance companies, foundations, endowments, and investment managers.

Stock Performance Highlights: A Year of Contrast

Over the past 52 weeks, State Street’s shares have notably outperformed the broader market. STT has enjoyed a rally of 38.7%, in contrast to the S&P 500 Index’s (SPX) 22.3% gain. However, when looking at the year-to-date (YTD) figures, the stock’s rise has been modest at 1%, which falls short of the SPX’s increase of 4%.

Narrowing our focus further, State Street’s results have exceeded the Financial Select Sector SPDR Fund’s (XLF) return of 32.5% for the same period. Yet, on a YTD basis, STT has lagged, with XLF achieving a 7.2% increase.

Market Reaction to News and Earnings

On February 3, shares of STT fell by 3.4% after Vanguard Group announced fee reductions for multiple mutual funds and ETFs. This news contributed to a decline in shares of other asset management companies, such as Blackrock (BLK) and Invesco (IVZ).

Earlier, on January 17, State Street experienced a nearly 2.9% drop in share price following its Q4 earnings release. Although the company posted adjusted earnings of $2.60 per share—up 27.4% year-over-year—and revenues of $3.4 billion with a 12.2% annual growth, the reaction was tempered by a less-than-rosy 2025 outlook.

Future Prospects and Analyst Consensus

Investors were disappointed by the company’s forecast for fiscal 2025, anticipating flat net interest income (NII) and a 3-5% increase in fee income, a drop from fiscal 2024’s 5.9% rise in NII and 6.3% growth in fee income.

For the current fiscal year, which ends in December, analysts project STT’s earnings per share (EPS) to increase by 11.3% to $9.65. The company has a strong earnings surprise history, beating Wall Street estimates in each of the last four quarters.

Among 17 analysts covering State Street, the consensus rating stands at “Moderate Buy,” reflecting eight “Strong Buy,” one “Moderate Buy,” seven “Hold,” and one “Moderate Sell” ratings. This is a shift toward optimism compared to three months ago, where only seven analysts advocated for a “Strong Buy.”

On January 22, Argus maintained a “Buy” rating on STT, raising its price target to $115, indicating a potential upside of 16% from current levels. The mean price target of $112.57 suggests a 13.5% upside, with a Street-high target of $138 reflecting a potential increase 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.

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