State Street stock target cut to $104 at Truist Securities

On Tuesday, Truist Securities adjusted its financial outlook for State Street Corporation (NYSE:STT), reducing the price target to $104 from $106 while maintaining a Hold rating on the shares. The revision follows the company's fourth-quarter 2024 performance and its forward-looking guidance for 2025, which did not meet expectations in terms of revenue projections and payout ratios.

Currently trading at $99.62, State Street has shown strong momentum with a 33% return over the past year. According to InvestingPro data, 5 analysts have recently revised their earnings estimates upward for the upcoming period, suggesting potential optimism despite the target reduction.

Analysts at Truist Securities have revised their earnings per share (EPS) estimates for State Street, decreasing the 2025 EPS estimate by approximately 1.5% to $9.55, and the 2026 EPS estimate by roughly 1% to $10.70.

The adjustments were primarily influenced by anticipated lower revenue, including a projection of flat net interest income (NII) for 2025 and reduced servicing fees in 2026 based on assets under custody/administration (AUC/A) figures that fell short of expectations in the fourth quarter of 2024.

The revised estimates also take into account a higher share count than previously modeled. Truist Securities had anticipated a payout ratio nearing 100%, but management at State Street appears to be aiming for a figure closer to 80%. This change in the payout ratio has a direct impact on the share count and, consequently, EPS forecasts.

Notably, InvestingPro analysis shows State Street has maintained dividend payments for 55 consecutive years, with a current dividend yield of 3.11%. For deeper insights into State Street's dividend sustainability and comprehensive financial analysis, investors can access the detailed Pro Research Report, available exclusively to InvestingPro subscribers.

In contrast to the lowered revenue and share count expectations, Truist Securities noted a positive adjustment in their expense modeling for State Street. The analysts expect lower expenses, primarily in compensation, which serves as a partial counterbalance to the other downward pressures on the financial institution's outlook.

State Street's new price target of $104 reflects a modest reduction of about 2% from the previous target, as Truist Securities continues to advise investors to maintain their current positions without increasing their holdings. The Hold rating suggests a neutral stance, indicating that the analysts do not foresee substantial movement in the stock's price in the near term. With a market capitalization of $28.79 billion and revenue growth of 8.62% in the last twelve months, State Street maintains a FAIR overall financial health score according to InvestingPro's comprehensive evaluation metrics.

In other recent news, State Street Corporation reported a successful fourth quarter, with earnings and revenue surpassing analyst expectations. The financial services company posted adjusted earnings per share of $2.60, exceeding the analyst consensus of $2.36, while revenue for the quarter was reported at $3.41 billion, outperforming the estimated $3.29 billion and marking a 12% increase year-over-year. State Street's total fee revenue saw a 13% rise to $2.66 billion, and net interest income increased 10% to $749 million compared to the same quarter last year.

State Street also reported a 19% year-over-year increase in total deposits, driven by a significant rise in interest-bearing deposits, up 37%, and an 18% increase in loans. Assets under custody and administration reached $46.7 trillion, marking an 11% increase from the previous year, while assets under management climbed by 15% to $4.7 trillion.

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