State Street Earnings: Decent Quarter but Our Long-Term View Intact

Wide-moat State Street reported a decent third quarter. Revenue, excluding the firm’s securities repositioning, was $2.98 billion and adjusted EPS was $1.93, which beat the respective FactSet consensus estimates of $2.92 billion and $1.79. Overall, there was little in the firm’s earning release that would alter our long-term view of the firm. We will maintain our fair value estimate of $68 on State Street’s shares and continue to prefer peer BNY Mellon over State Street. State Street’s clients tend to be sophisticated and its asset manager customers continue to consolidate and face fee pressure, which, in our view, limits the firm’s profitability.