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Valued at a market cap of $26.1 billion, Boston, Massachusetts-based State Street Corporation (STT) is a leading financial holding company serving institutional investors worldwide. State Street’s clients include mutual funds, retirement plans, insurance companies, investment managers, foundations, and endowments.
Companies worth more than $10 billion are generally labeled as “large-cap” stocks and State Street fits this criterion perfectly. Through its subsidiaries, the company offers a broad range of investment servicing, management solutions, and front-office technologies, including custody, fund administration, securities finance, foreign exchange, and performance analytics.
Despite a 12.1% decline from its 52-week high of $103, shares of the company have decreased 7.8% over the past three months, lagging behind the Financial Select Sector SPDR Fund’s (XLF) nearly 2% rise over the same time frame.
In the longer term, STT stock is down 7.7% on a YTD basis, underperforming XLF’s 2.3% gain. However, shares of State Street have gained 19.3% over the past 52 weeks, slightly outperforming XLF’s 18% return over the same time frame.
Despite its recent downfall, STT has been trading above its 50-day and 200-day moving averages since last year.
Despite State Street posting better-than-expected Q4 2024 adjusted EPS of $2.60, shares fell 2.9% on Jan. 17 due to a weaker 2025 earnings outlook. Management guided for flat net interest income (NII) in 2025, raising concerns about margin pressure after NII grew 5.9% in 2024. Additionally, fee income growth is expected to slow to 3% - 5%, signaling softer revenue momentum. Investors also reacted to higher adjusted expenses and a lower Common Equity Tier 1 (CET1) ratio, driving the bearish sentiment.
Nevertheless, STT has outperformed its rival, Blackstone Inc. (BX), which saw a nearly 14% decrease on a YTD basis and a 12.6% gain over the past 52 weeks.
Despite State Street’s outperformance relative to its industry peers, analysts remain cautiously optimistic about its prospects. The stock has a consensus rating of “Moderate Buy” from 18 analysts' coverage, and as of writing, STT is trading below the mean price target of $112.78.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
