On Tuesday, CFRA increased its price target for Bank of New York Mellon (NYSE:BK) shares to $63 from the previous $58, while maintaining a Buy rating. The firm highlighted the bank's enhanced performance under the guidance of a CEO who took the helm a year ago.
The new price target is based on a forward price-to-earnings (P/E) ratio of 11.5 times, which aligns with the three-year historical average.
Bank of New York Mellon reported first-quarter earnings per share (EPS) of $1.29, surpassing estimates by $0.10, and generated revenues of $4.5 billion, marking a 3% increase year-over-year (Y/Y). CFRA has adjusted its revenue forecast for the bank to $18.0 billion for 2024, up from the prior $17.7 billion, and to $18.6 billion for 2025, slightly up from the previous $18.5 billion estimate.
In the first quarter, the Security Services segment of Bank of New York Mellon saw a 1% Y/Y growth in revenue and a 4% increase in pre-tax income. This was attributed to gains in issuer and asset servicing.
The Market and Wealth Services segment experienced a 7% Y/Y rise, despite a 2% quarter-over-quarter decrease, with significant contributions from Pershing at 3% Y/Y growth, Treasury Services up by 5%, and Clearance and Collateral Management surging by 13%.
The bank's Investment and Wealth Management division reported a 2% Y/Y increase, with investment management fees also up by 2%. Net interest income, however, fell by 8% Y/Y due to changes in the balance sheet mix, which was somewhat mitigated by higher interest rates. Average deposits saw a 2% rise both Y/Y and from the previous quarter.
In the same quarter, Bank of New York Mellon returned $324 million to shareholders in the form of dividends and repurchased $988 million of its shares.
InvestingPro Insights
As Bank of New York Mellon (NYSE:BK) garners attention with its latest earnings report and CFRA's updated price target, insights from InvestingPro reveal additional layers to the company's financial health and market performance. With a market capitalization of $40.62 billion, BK is trading at a P/E ratio of 13.89, which is notably lower than the forward P/E ratio of 11.5 times cited by CFRA, indicating potential undervaluation relative to near-term earnings growth. This aligns with an InvestingPro Tip noting that the stock is trading at a low P/E ratio in contrast to its earnings growth prospects.
Moreover, the bank's commitment to shareholder returns is evidenced by a robust dividend track record. An InvestingPro Tip highlights that BK has raised its dividend for 13 consecutive years, with a current dividend yield of 2.95%. This is complemented by a strong price performance, with a 6-month total return of 38.73%, showcasing investor confidence in the bank's trajectory.
For readers looking to delve deeper into Bank of New York Mellon's financials and stock performance, InvestingPro offers a suite of additional tips. There are 6 more tips available, including insights on management's share buyback strategy and analysts' earnings revisions for the upcoming period. To explore these tips and more, visit InvestingPro and consider using the coupon code PRONEWS24 to get an extra 10% off a yearly or biyearly Pro and Pro+ subscription.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.