Bullish indicating open at $55-$60, IPO prices at $37
On Wednesday, CFRA analyst Kenneth Leon increased the price target for Bank of New York Mellon (NYSE:BK) shares to $95 from the previous $88, while reaffirming a Buy rating on the stock. Leon's adjustment reflects a positive outlook based on the company's performance and future earnings projections. The stock, currently trading at $81.89, has delivered an impressive 42.48% return over the past year and is trading near its 52-week high of $82.72. InvestingPro data shows 5 analysts have recently revised their earnings estimates upward, suggesting growing confidence in the company's prospects.
The new price target is set against a forward Price-to-Earnings (P/E) ratio of 14.3 times, which aligns with the three-year historical average P/E of 14.5 times. Leon has also raised the earnings per share (EPS) estimate for 2025 by $0.15 to $6.65 and introduced a 2026 EPS forecast of $7.50.
Bank of New York Mellon reported robust results for the fourth quarter across all segments, posting an EPS of $1.54, which was $0.02 higher than the consensus estimate. The bank, serving as a custodian, gained from increased market values and transaction fees. As of December 31, the assets under custody were recorded at $52.1 trillion, marking a 9% year-over-year increase, and assets under management stood at $2.0 trillion, up 3% from the previous year. With a market capitalization of $59.58 billion and a consistent dividend growth streak of 14 years, the bank offers a current dividend yield of 2.48%. For deeper insights into BK's financial health and growth prospects, investors can access the comprehensive Pro Research Report available on InvestingPro.
The Security Services segment, accounting for 48% of the total revenue mix, saw a year-over-year increase of 7%, with pretax margins improving to 28% from 21%. Market and Wealth Services, which constitute 34% of the revenue, experienced an 11% rise, with pretax margins jumping by 610 basis points to 48%. This growth was supported by Pershing's 9% revenue increase, a 15% uptick in treasury services, and a 13% rise in clearance collateral services.
Investment and Wealth Management revenues, representing 18% of the total, surged by 29% with pretax margins significantly increasing to 20%. The bank's net interest income, which makes up 25% of the total revenue, grew by 14% year-over-year, and net interest margins improved to 1.32% from 1.26%. Additionally, Bank of New York Mellon saw its total deposits rise by 5% and loans by 2%.
In other recent news, The Bank of New York Mellon Corporation reported a robust fourth quarter in 2024, surpassing analyst expectations. The company posted adjusted earnings per share of $1.54, outperforming the analyst consensus of $1.51. Revenue for the quarter was reported at $4.85 billion, exceeding the estimated $4.64 billion, marking a significant increase from the same period in the previous year.
BNY Mellon's strong performance was credited to substantial growth across its key business segments. The company reported $52.1 trillion in assets under custody and/or administration as of December 31, 2024, underscoring its commanding position in the global financial services industry. Additionally, BNY Mellon's assets under management reached a notable $2.0 trillion by the end of the quarter.
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