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State Street Corporation (NYSE:STT), a leading financial services provider with a market capitalization of $28.67 billion, has announced a significant change to its capital structure, involving the issuance of a new series of preferred stock and corresponding depositary shares. According to InvestingPro data, the company has maintained dividend payments for 55 consecutive years, demonstrating a strong track record of financial stability. The company filed Articles of Amendment on January 31, 2025, to establish the terms of its Fixed Rate Reset Non-Cumulative Perpetual Preferred Stock, Series K.
In a move to raise capital, State Street entered into an underwriting agreement on January 30, 2025, with BofA Securities, Inc. and Morgan Stanley (NYSE:MS) & Co. LLC, representing the underwriters. The agreement facilitates the public offering of 750,000 depositary shares, each representing a 1/100th ownership interest in a share of the newly created Preferred Stock, priced at $1,000 per depositary share.
The offering, made under a Registration Statement on Form S-3 filed on June 28, 2022, and subsequent prospectus supplements filed on January 30 and 31, 2025, is expected to yield approximately $743.1 million in net proceeds for State Street, after accounting for underwriting discounts and estimated offering expenses. The company’s stock has shown strong momentum, with a 29.69% return over the past six months, and currently trades near its 52-week high of $103.Dive deeper into State Street’s financial health and growth prospects with InvestingPro, which offers comprehensive analysis and additional valuable insights through its detailed Pro Research Report.
State Street anticipates entering into a deposit agreement with Equiniti Trust Company, LLC, which will act as the depositary for the depositary shares, with further details to be filed subsequently.
The introduction of Series K Preferred Stock represents a material modification to the rights of security holders, as it introduces a new class of stock with specific designations, preferences, and rights. This strategic financial maneuver aims to bolster State Street’s capital position, potentially supporting its growth initiatives or other corporate purposes. With a current dividend yield of 3.09% and an overall Financial Health Score of "FAIR" from InvestingPro, the company maintains a balanced approach to capital management while trading near its Fair Value.
This news is based on a press release statement and reflects the company’s latest steps in managing its capital structure and fundraising efforts.
In other recent news, State Street Corporation has seen a variety of analyst adjustments. Wolfe Research upgraded State Street’s stock rating from Underperform to Peerperform, citing improved dynamics in its Lines of Business and an increased Earnings Per Share (EPS) growth algorithm. Goldman Sachs, while maintaining a Buy rating, adjusted State Street’s stock target to $105 from $107, emphasizing the company’s growing momentum in servicing fees and stable expectations for Net Interest Income (NII).
Conversely, Truist Securities reduced its price target for State Street to $104 from $106, maintaining a Hold rating due to lower-than-expected revenue projections. CFRA analyst Kenneth Leon upgraded State Street’s stock rating from Hold to Buy, despite reducing the price target to $113 from $117, noting an "enhanced opportunity with a lower share price." Goldman Sachs reaffirmed its Buy rating and a $107.00 price target for State Street, despite the company’s 2025 financial outlook potentially falling short of investor expectations.
These recent developments reflect varying perspectives on State Street’s financial performance and growth potential. The company’s focus on delivering positive fee operating leverage and its pledge to return 80% of its earnings to shareholders are among the factors influencing these analyst adjustments.
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