Goldman Sachs analyst Alexander Blostein has maintained their neutral stance on NTRS stock, giving a Hold rating on January 19.
Alexander Blostein has given his Hold rating due to a combination of factors that impact Northern Trust Corp.’s outlook and valuation. The revision of earnings per share (EPS) estimates for 2024 to 2026 acknowledges the beneficial effects of higher market levels on fees. However, Blostein maintains a Neutral stance on the stock, attributing this to the headwinds facing near-term EPS estimates and the stock’s valuation, which is significantly higher compared to its peers. The stock’s current premium is not fully justified considering Northern’s growth profile, which is less differentiated than in the past, suggesting limited potential for stock price appreciation.
Blostein does recognize the positive aspects of Northern’s strategy, such as the repositioning of its securities portfolio, which provides a near-term boost to Net Interest Income (NII). Nonetheless, he perceives this mainly as a forward-shifting of revenue, which could increase vulnerability to future interest rate cuts. Additionally, there are concerns that the decline in NII could be more pronounced later in 2024 due to potentially lagging deposit betas. While fee growth is expected to pick up pace in 2024 with controlled core expense growth, overall profitability may still linger below historical levels. Blostein also anticipates increased stock repurchase activity in 2024 as the firm liquidates some of its Visa gains, forecasting a payout ratio of around 120%.
According to TipRanks, Blostein is a 5-star analyst with an average return of 15.1% and a 74.11% success rate. Blostein covers the Financial sector, focusing on stocks such as Invesco, BlackRock, and Franklin Resources.
In another report released on January 19, Evercore ISI also maintained a Hold rating on the stock with a $86.00 price target.
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Northern (NTRS) Company Description:
Northern Trust Corp. is a financial holding company, which engages in the provision of asset servicing, fund administration, asset management, fiduciary, and banking solutions for corporations, institutions, families, and individuals. It operates through the following segments: Corporate & Institutional Services and Wealth Management. The Corporate & Institutional Services Segment offers asset servicing, brokerage, banking and related services to corporate and public retirement funds, foundations, endowments, fund managers, insurance companies, and sovereign wealth funds. The Wealth Management Segment includes trust, investment management, custody, and philanthropic services, financial consulting; guardianship and estate administration, family business consulting; family financial education, brokerage services and private and business banking. Northern Trust was founded in 1971 and is headquartered in Chicago, IL.
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