State Street Is Riding The Wave Of Favorable Market Conditions, Analyst Says

Group 1 - RBC Capital analyst Gerard Cassidy reiterated a Sector Perform rating on State Street Corp (STT) and raised the price target from $85 to $91 [1] - STT reported 2Q24 EPS of $2.15, exceeding the analyst's estimate of $2.05, driven by better-than-expected net interest income and fee revenues [1] - Net interest income (FTE) for the quarter was $736 million, up from $717 million in the prior quarter and $691 million in the year-ago quarter [1] - Tangible book value (TBV) per share increased 1.6% to $45.25 from $44.56 in the prior quarter and 4.8% from $43.18 in the year-ago period [1] - Core return on average assets (ROAA) rose to 0.86% from 0.70% in the prior quarter, while core return on average common equity (ROACE) increased to 11.9% from 9.5% [1] Group 2 - STT has secured over $330 million in servicing fee wins in the past 12 months, indicating strong demand for its products and services [2] - The analyst anticipates a combined payout ratio of approximately 100% for STT in 2024 and 2025 due to strong capital levels [2] - If the Federal Reserve cuts interest rates, STT is expected to experience an immediate impact on its net interest income due to repricing [2] - STT is well positioned for the next 12 months with a strong pipeline of new business and potential for meaningful stock buybacks [2] - STT shares were trading lower by 0.39% at $84.49 at the last check [2]