State Street Positioned for Turnaround: Buy Rating Backed by Earnings Growth and Strategic Initiatives

Wells Fargo analyst Mike Mayo maintained a Buy rating on State Street (STT – Research Report) today and set a price target of $113.00.

Mike Mayo has given his Buy rating due to a combination of factors that suggest a positive turnaround for State Street. The company is expected to see a significant improvement in earnings per share over the next three years, driven by new business acquisitions, enhanced pre-tax margins, and strategic buybacks. These elements are anticipated to reverse a decade of underperformance, positioning State Street to exceed market expectations without requiring extraordinary measures.
Additionally, State Street’s valuation appears attractive, with its price-to-earnings ratio having dropped significantly over the past decade. The company is making strides in organic growth and cost savings, and it aims to restore its pre-tax margin to previous levels. Furthermore, the elimination of headwinds from the transition of BlackRock’s custody business and a robust backlog of business installations support a positive outlook for fee growth. State Street’s strong position in the global asset management market, particularly in ETFs, also presents opportunities for margin improvement.

Mayo covers the Financial sector, focusing on stocks such as Fifth Third Bancorp, JPMorgan Chase, and Citigroup. According to TipRanks, Mayo has an average return of 12.4% and a 63.41% success rate on recommended stocks.

In another report released on May 12, Evercore ISI also maintained a Buy rating on the stock with a $92.00 price target.