Jefferies Cuts Price Target & Estimates on State Street (STT), Expenses Remain High
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Price: $73.98 -0.42%
Rating Summary:
9 Buy, 14 Hold, 3 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 10 | Down: 11 | New: 7
Rating Summary:
9 Buy, 14 Hold, 3 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 10 | Down: 11 | New: 7
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Jefferies is maintaining its Buy rating on shares of State Street (NYSE: STT), but is cutting its price target from $61 to $57 following Q2 miss.
The firm cut its 2011 EPS estimate by $0.10 to $3.70 and its 2012 estimate by $0.30 to $4.05. It notes that its new estimates go inline with its model which includes a higher expense run-rate with $15 million a quarter for consultants related to restructuring plan and accounting for $7 million in preferred quarterly dividends.
The company is strong looking forward due to it solid pipeline and pending conversions of recent business wins.
An analyst at Jefferies comments, "Outlook for expenses remains uncertain given our belief that it will be difficult to drive the comp/revenue ratio down from here if total expenses are flat with 2Q levels."
State Street is well-positioned to deploy excess capital given that the Basel-III has an adjusted Tier 1 common ratio of 11.8 percent. The firm points out that management will always have the opportunity to declare buybacks or raise dividends, but taking advantage of strong acquisitions needs to be done when possible.
For more ratings news on State Street click here and for the rating history of State Street click here.
Shares of State Street closed at $42.02 yesterday.
The firm cut its 2011 EPS estimate by $0.10 to $3.70 and its 2012 estimate by $0.30 to $4.05. It notes that its new estimates go inline with its model which includes a higher expense run-rate with $15 million a quarter for consultants related to restructuring plan and accounting for $7 million in preferred quarterly dividends.
The company is strong looking forward due to it solid pipeline and pending conversions of recent business wins.
An analyst at Jefferies comments, "Outlook for expenses remains uncertain given our belief that it will be difficult to drive the comp/revenue ratio down from here if total expenses are flat with 2Q levels."
State Street is well-positioned to deploy excess capital given that the Basel-III has an adjusted Tier 1 common ratio of 11.8 percent. The firm points out that management will always have the opportunity to declare buybacks or raise dividends, but taking advantage of strong acquisitions needs to be done when possible.
For more ratings news on State Street click here and for the rating history of State Street click here.
Shares of State Street closed at $42.02 yesterday.
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