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On Thursday, CFRA analysts revised their outlook on State Street Corporation (NYSE:STT), downgrading the stock from "Buy" to "Hold" and adjusting the price target to $105.00, a decrease from the previous target of $110.00. The change in rating comes after a notable increase in the share price, which has risen 31% from its April lows, leading analysts to believe there is limited room for further upside to the new target. According to InvestingPro data, the stock is currently trading at $96.65, with a market capitalization of $27.61 billion. InvestingPro analysis suggests the stock is fairly valued at current levels, aligning with CFRA’s cautious stance.
Kenneth Leon of CFRA provided insights into the rationale behind the downgrade, citing that the forward price-to-earnings (P/E) ratio applied to the 2026 earnings estimate is 10.2 times, which is higher than the five-year historical average of 9.8 times. The current P/E ratio stands at 10.7x, and InvestingPro identifies the stock as trading at a low P/E ratio relative to near-term earnings growth. Despite the downgrade, CFRA continues to recognize State Street’s earnings growth potential over the next 12 months, hence the relative premium valuation. Notably, the company has maintained dividend payments for 55 consecutive years, currently offering a 3.14% yield.
The analyst also referenced net tangible book value as a key valuation metric, noting that State Street currently trades at 1.8 times net tangible book value, in comparison to the five-year historical average of 1.9 times. According to CFRA’s assessment, the target price of $105 would suggest a price/net tangible book value of 2.1 times, slightly exceeding the historical range.
The revised price target of $105 reflects a modest decrease from the prior target, suggesting a more conservative outlook on the stock’s future performance. The application of a forward P/E ratio above the historical average underpins the decision to lower the target price and rating.
State Street Corporation’s stock adjustment follows a period of significant share price recovery, prompting a reassessment of the stock’s valuation and future prospects by CFRA analysts. The new hold rating indicates a neutral stance on the stock’s potential for short-term growth.
In other recent news, State Street Corporation reported significant developments, beginning with an upgrade from Truist Securities. Analyst David Smith elevated State Street’s rating from Hold to Buy and increased the price target to $112, highlighting the company’s strategic advantage in the equity market and its substantial foreign exchange revenue. Additionally, State Street appointed John F. Woods as the new Chief Financial Officer, transitioning from Citizens Financial (NYSE:CFG) Group, which is expected to bolster the company’s financial strategy. In another leadership move, Sara Mathew was named the independent Lead Director of the Board, succeeding Dame Amelia Fawcett. These changes in executive leadership aim to enhance State Street’s strategic direction and investor confidence.
Furthermore, State Street’s asset-management division, State Street Global Advisors, engaged in preliminary discussions with Carlyle Group (NASDAQ:CG) Inc. to explore a joint venture. The potential partnership seeks to create a product merging public and private markets for individual investors, which could significantly impact the retail wealth sector. The discussions underscore State Street’s commitment to expanding its market reach and adapting to evolving financial landscapes. These recent developments reflect the company’s proactive approach to strengthening its market position and operational leadership.
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