RBC Capital Markets has adjusted its outlook on Northern Trust Corporation (NASDAQ: NASDAQ:NTRS), increasing the price target to $107.00, up from the previous $100.00, while reaffirming an Outperform rating for the stock.
The firm recognizes Northern Trust as a leading trust company, known for its strong performance over various market cycles.
Northern Trust has reported robust results for the third quarter of 2024, demonstrating solid financial performance. However, the company continues to face challenges with persistent expense issues that are impacting its overall results.
RBC Capital anticipates that Northern Trust's management will actively work to reduce expense growth, although it acknowledges that this task may present difficulties and could require a considerable amount of time to achieve.
In their commentary, RBC Capital cited the company's "best-in-class, through-the-cycle results," indicating a history of strong performance even amid varying economic conditions. RBC Capital's outlook suggests that Northern Trust's reputable management team and its established position in the industry provide a solid foundation for the company to overcome current and future challenges.
In other recent news, Northern Trust has been in the spotlight following the release of its third-quarter earnings, which revealed robust growth and strong net interest income (NII) dynamics. Evercore ISI raised the price target for Northern Trust to $103, maintaining an In-Line rating, following these positive results. BofA Securities also increased its price target for the company to $115, based on the strong earnings performance.
Northern Trust reported net income of $465 million and earnings per share of $2.22 in the third quarter. Key contributing factors included a rise in Trust fees, particularly in Wealth Management which saw a 9% increase, and assets under management (AUM) reaching a record $444 billion, marking a 20% year-over-year increase. The company's management has been focusing on achieving positive fee operating leverage, aided by favorable market conditions.
These recent developments have led to a return of $453 million to shareholders through dividends and stock repurchases. BofA Securities and Evercore ISI have revised their EPS estimates for Northern Trust's fourth quarter 2024 and full-year 2025 to $1.92 and $7.58 respectively, reflecting the company's strong performance.
InvestingPro Insights
Northern Trust Corporation's recent performance aligns with RBC Capital's optimistic outlook. According to InvestingPro data, the company's revenue growth stands at 16.78% over the last twelve months, with a robust 14.48% growth in the most recent quarter. This growth trajectory supports RBC's confidence in Northern Trust's ability to navigate market challenges.
InvestingPro Tips highlight Northern Trust's financial strength and shareholder value. The company has maintained dividend payments for an impressive 54 consecutive years, demonstrating long-term stability. Additionally, Northern Trust is trading at a low P/E ratio relative to its near-term earnings growth, with a current P/E ratio of 11.97. This suggests potential undervaluation, which could align with RBC's increased price target.
The company's strong recent performance is further evidenced by its 67.24% price total return over the past year, and it's currently trading near its 52-week high at 98.33% of that level. These metrics reinforce RBC's Outperform rating and the company's ability to deliver "best-in-class, through-the-cycle results" as mentioned in the article.
For investors seeking more comprehensive analysis, InvestingPro offers 11 additional tips for Northern Trust Corporation, providing deeper insights into the company's financial health and market position.
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