Truist Securities lifts State Street stock to Buy, target to $112

On Wednesday, Truist Securities analyst David Smith raised the rating for State Street (NYSE:STT), currently trading at $97.43 with a market capitalization of $27.79 billion, from Hold to Buy and increased the price target to $112 from the previous $85. According to InvestingPro data, the company trades at an attractive P/E ratio of 10.76x while delivering solid revenue growth of 9.48% in the last twelve months. Smith highlighted that State Street stands to gain the most among trust banks from the recent positive trend in equity markets due to its Assets Under Custody/Assets Under Administration (AUC/AUA) mix and its exchange-traded fund (ETF) and asset management operations. Additionally, the company’s significant revenue from foreign exchange (FX) activities, which is more than double that of its peers, positions it well in the face of higher FX volatility. The company has maintained dividend payments for 55 consecutive years, currently offering a 3.12% yield.

The analyst also pointed out that as rate futures rise, State Street’s disclosed asset sensitivity could serve as a catalyst for the company to recover from its recent underperformance compared to Bank of New York Mellon (NYSE:BK) and the broader banking sector. The appointment of a permanent Chief Financial Officer (CFO) was also seen as a positive development. Although the search for a new CFO had not been a pressing concern, the resolution of this matter removes any lingering uncertainty.

State Street’s strategic positioning and the recent executive appointment are expected to contribute to the company’s performance and investor confidence. The upgraded rating and price target reflect Truist Securities’ positive outlook on the company’s prospects in light of these developments.

In other recent news, State Street Corporation has issued $2 billion in senior notes, consisting of three tranches with varying maturity dates and interest rates. This financial maneuver is expected to generate approximately $1.991 billion in net proceeds, which the company plans to use to strengthen its financial standing. Additionally, State Street has appointed John F. Woods as its new Chief Financial Officer, effective in late August. Woods, who brings extensive experience from his role at Citizens Financial (NYSE:CFG) Group, will succeed interim CFO Mark Keating. In a separate development, State Street has named Sara Mathew as the new independent Lead Director of its Board. Mathew, who has been part of the Board since 2018, succeeds Dame Amelia Fawcett. Moreover, State Street Global Advisors is in preliminary talks with Carlyle Group (NASDAQ:CG) Inc. to explore a joint venture aimed at merging public and private markets for individual investors. These discussions could potentially advance the private-capital industry’s access to retail wealth.

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