Bank of New York Mellon (NYSE:BNY) shares fell in early trading on Thursday, after rallying following the second-quarter results.
The company’s transformation has helped it continue delivering best-in-class results, according to RBC Capital Markets.
• Bank of New York Mellon shares are experiencing downward pressure. What’s pulling BNY shares down?
The Bank of New York Mellon Analyst: Analyst Gerard Cassidy maintained an Outperform rating, while raising the price target from $142 to $168.
The Bank of New York Mellon Thesis: The company reported record revenue and strong earnings growth, with fee revenue momentum across all businesses, Cassidy said in the note.
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He highlighted the following from Bank of New York Mellon’s results:
- Revenue grew 5% sequentially and 13% year-on-year to a record $5.7 billion.
- Revenue was driven by broad-based growth across all three business segments, namely Securities Services, Market and Wealth Services, and Investment and Wealth Management.
- Net income applicable to common shareholders grew by 22% year-on-year to $1.7 billion.
- Diluted earnings grew 9% sequentially or 27% year-on-year to $2.45 per share.
Total fee revenue grew 7% sequentially or 11% year-on-year to $4 billion, “reflecting net new business, higher market values and elevated client activity,” the analyst stated.
Securities Services “was a standout,” with fee revenue up 15% year-on-year to $2.0 billion, driven by strong Asset Servicing and Issuer Services, he added.
Bank of New York Mellon has broken down business unit silos and controlled its expense growth, Cassidy noted. By focusing on execution, the company “is achieving strong positive operating leverage (its Northstar), which will lead to enhanced EPS growth,” he further wrote.
BNY Price Action: Shares of Bank of New York Mellon had declined by 1.34% to $160.18 at the time of publication on Thursday.
