CFRA Downgrades State Street (STT) to Sell

CFRA analyst Kenneth Leon downgraded State Street (NYSE: STT) from Hold to Sell with a price target of $78.00 (from $85.00).

The analyst comments "We think STT shares will be a relative underperformer to the financial sector given 3%-4% estimated fee income growth and declining net interest income (NII). We lower our target by $7 to $78 using a forward P/E of 10.1x, just below the three-year historic average at 10.8x. STT's net tangible book value (NTBV) is $44.23, which equates to a P/NTBV of 1.8x, near the three-year average. STT shares have a 1.5x beta and the share price is up nearly 17% from last October's lows. We keep our 2024 EPS view at $7.70 ($7.75 consensus) and 2025's at $8.30 ($8.44) as we are more conservative on the noninterest income outlook with moderate asset under management growth. NII (22% of total net revenue) was -14.3% Y/Y in Q4 comps, while 2023 NII was +8.5%. We think 2024 is likely to see tough NII comps as STT sees lower rates (-10% Y/Y). Total noninterest income was flat Y/Y in Q4 2023, with servicing fees -2%, management fees flat, forex trading services -2%, front office software and data -2%, and securities finance -6%."

For an analyst ratings summary and ratings history on State Street click here. For more ratings news on State Street click here.

Shares of State Street closed at $73.44 yesterday.

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