State Street has been authorized by the Federal Reserve to resume share repurchases in the first quarter of 2021. The announcement followed the release of the Federal Reserve’s supervisory stress test for financial institutions on Dec. 18. State Street shares were up 2.8% in the extended trading session on Friday.
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The leading custody bank has been authorized to continue to pay dividends at current levels and to resume share repurchases in the first quarter of 2021 in an aggregate amount of up to the average of its quarterly net income during 2020. Additionally, State Street (STT) may redeem or make scheduled payments on other capital instruments.
CEO Ron O’Hanley stated, “We are pleased with our strong performance under this year’s second round of Federal Reserve stress tests, which is another testament to our business model’s resiliency and capital stability. Throughout 2020, amidst the pandemic, our robust balance sheet and capital position has enabled us to operate effectively, help stabilize the financial markets, and actively support our clients. We now look forward to returning excess capital to our shareholders in the new year.” (See STT stock analysis on TipRanks)
On Dec. 11, Credit Suisse analyst Susan Roth Katzke increased the price target for State Street to $78 from $68 but reiterated a Hold rating. The analyst increased her price targets in the U.S. large-cap bank sector, stating that with a vaccine on the horizon and a shift in risks she sees “more upside and less downside” around base case estimates.
Overall, the rest of the Street is cautiously optimistic, with a Moderate Buy analyst consensus based on 5 Buys and 5 Holds. The average price target of $81.10 indicates a 14.8% upside potential from current levels. Shares have declined 10.7% year-to-date.
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