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Story updated at 10 a.m. to reflect market activity.

NEW YORK (TheStreet) -- Citigroup initiated coverage of State Street (STT) with a "buy" rating on Wednesday.

Shares of State Street gained 0.4% to $74.23 in morning trading.

The analyst firm set a price target of $90 for the asset management company. The company has lagged behind its peers, but has potential operating leverage, according to Citigroup analysts.

"STT is our top pick, because while scale is a big advantage in providing commodity-like back and middle office functions, we believe STT is at the forefront of leveraging its technology and data to provide real value-added services to their clients to help them evaluate risk exposures and performance in order to satisfy increased regulatory and investor requirements, which can be a key differentiator," Citigroup analysts wrote.

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Separately, TheStreet Ratings team rates STATE STREET CORP as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate STATE STREET CORP (STT) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels, expanding profit margins, good cash flow from operations and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • STT's revenue growth has slightly outpaced the industry average of 2.5%. Since the same quarter one year prior, revenues slightly increased by 0.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • STATE STREET CORP has improved earnings per share by 11.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, STATE STREET CORP increased its bottom line by earning $4.61 versus $4.19 in the prior year. This year, the market expects an improvement in earnings ($4.82 versus $4.61).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Capital Markets industry average. The net income increased by 7.4% when compared to the same quarter one year prior, going from $579.00 million to $622.00 million.
  • The gross profit margin for STATE STREET CORP is currently very high, coming in at 96.61%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 23.14% is above that of the industry average.
  • You can view the full analysis from the report here: STT Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.