It's been a pretty great week for State Street Corporation (NYSE:STT) shareholders, with its shares surging 13% to US$85.34 in the week since its latest quarterly results. State Street reported US$3.2b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$2.15 beat expectations, being 6.1% higher than what the analysts expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the consensus forecast from State Street's 13 analysts is for revenues of US$12.6b in 2024. This reflects a credible 4.9% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to bounce 40% to US$7.67. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$12.5b and earnings per share (EPS) of US$7.52 in 2024. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
The analysts reconfirmed their price target of US$88.37, showing that the business is executing well and in line with expectations. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on State Street, with the most bullish analyst valuing it at US$103 and the most bearish at US$73.00 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the State Street's past performance and to peers in the same industry. The analysts are definitely expecting State Street's growth to accelerate, with the forecast 10% annualised growth to the end of 2024 ranking favourably alongside historical growth of 0.7% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 5.5% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect State Street to grow faster than the wider industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on State Street. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple State Street analysts - going out to 2026, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with State Street , and understanding it should be part of your investment process.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com