CFRA raised the price target on shares of Bank of New York Mellon (NYSE:BK) to $81.00, up from the previous $75.00, while maintaining a Buy rating on the stock. The firm cited the bank's potential for increased profitability driven by revenue growth and wider margins resulting from its restructuring and new strategy. The new price target is based on a forward P/E of 13.0x CFRA's 2025 earnings per share (EPS) estimate, which is slightly below the three-year historical average of 13.6x.
CFRA's EPS projections remain steady at $5.65 for 2024 and $6.25 for 2025. The firm also forecasts revenue of $18.2 billion for 2024 and $18.8 billion for 2025, marking an increase from $15.5 billion in 2023. The analyst highlighted that Bank of New York Mellon's two main businesses, Asset Management and Custody segments, are well-positioned for growth following a strategic realignment by management.
In the first half of 2024, Bank of New York Mellon reported assets under custody of $49.5 trillion, which is a 6% increase year-over-year and a 1% rise from the previous quarter. Assets under management (AUM) also grew by 7% year-over-year and 1% sequentially to $2.1 trillion. The bank is expected to generate higher fee revenue in the second half of 2024 and into 2025, although net interest income (NII) may decline if the Federal Reserve cuts rates as expected.
Bank of New York Mellon is developing an open platform that will provide clients with comprehensive front-to-back office solutions. During the first half of 2024, the bank returned capital to shareholders through $646 million in dividends and $1.6 billion in common share repurchases, demonstrating its commitment to returning value to investors.
U.S. natural gas producer BKV made a notable debut on the New York Stock Exchange, achieving a market valuation of $1.56 billion. The positive reception from investors marked a promising start for BKV in the public market. Meanwhile, Bank of New York Mellon (BNY Mellon) has been the subject of various developments. Deutsche Bank upgraded its stock from Hold to Buy, raising the price target to $80.00, indicating potential for revenue growth. In addition, BNY Mellon has announced the acquisition of Archer Holdco, LLC, a technology-driven managed account solutions provider, expected to be completed in the fourth quarter of 2024.
This move is set to enhance BNY Mellon's managed account services. Furthermore, BNY Mellon has agreed to a $5 million settlement with the U.S. Commodity Futures Trading Commission (CFTC) over swap transaction-related issues. As part of the settlement, BNY Mellon committed to hiring an independent compliance consultant to improve its compliance program. These are the recent developments in the operations of BKV and BNY Mellon.
InvestingPro Insights
As Bank of New York Mellon (NYSE:BK) continues its strategic realignment, recent data from InvestingPro shows promising indicators for investors. The company's market capitalization stands at a robust $53.07 billion, underscoring its significant presence in the financial sector. Notably, the stock is trading at a price-to-earnings (P/E) ratio of 17.14, which is appealing when aligned with its near-term earnings growth, as the adjusted P/E ratio for the last twelve months as of Q2 2024 is lower at 13.57.
InvestingPro Tips spotlight the company's history of raising dividends, with a remarkable track record of 54 consecutive years of dividend payments, and a recent dividend yield of 2.6%. This consistent return to shareholders is complemented by a substantial one-year price total return of 76.48%, signaling strong investor confidence. Furthermore, the company's shares are currently trading near their 52-week high, at 98.25% of the peak price, reflecting a positive market sentiment.
For those considering an investment in Bank of New York Mellon, additional InvestingPro Tips are available, providing deeper insights into the company's financial health and market performance. With an array of 11 additional tips accessible on the platform, investors can make more informed decisions based on comprehensive analysis.
Bank of New York Mellon's commitment to shareholder value, as demonstrated through its capital return activities and consistent dividend growth, aligns with the positive outlook presented by CFRA. The bank's strategic initiatives and robust financial metrics present a compelling case for potential investors.
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