On Wednesday, BofA Securities updated its outlook on Northern Trust (NASDAQ:NTRS) shares, increasing the price target to $101 from $93, while maintaining a Buy rating on the stock. The adjustment follows Northern Trust's first-quarter 2024 core earnings per share (EPS) of $1.69, which surpassed market expectations.
This performance was attributed to a significant rise in net interest income, which reached $535 million, surpassing both BofA Securities' projection and the consensus estimate of $493 million and $500 million, respectively. Fee income also exceeded forecasts, coming in at $1,308 million compared to the expected $1,265 million and $1,285 million.
Despite these strong results, Northern Trust's shares did not perform as well as those of its peers. The analyst from BofA Securities suggested that this might be due to the company's limited EPS visibility, as Northern Trust did not provide detailed guidance in comparison to its competitors. This lack of specific future earnings projections may have contributed to the stock's underperformance.
The analyst pointed out that stock reactions during this earnings season have been inconsistent with the actual financial updates provided by companies. Market-wide macroeconomic concerns and investor positioning seem to have had a greater impact on stock movements than the earnings results themselves.
In light of Northern Trust's higher net interest income, BofA Securities has revised its full-year 2024 EPS estimate for the company upward by 6.2% to $6.73. This positive revision of the EPS forecast is the driving factor behind the new price objective of $101, up from the previous target of $93. The firm's analysis suggests that the stock's current valuation does not fully reflect the positive earnings revisions, leading to the maintained Buy rating.
InvestingPro Insights
As Northern Trust (NASDAQ:NTRS) continues to navigate the financial landscape post-earnings release, real-time data from InvestingPro offers a snapshot of the company's market position and financial health. With a market capitalization of $16.23 billion and a price-to-earnings (P/E) ratio standing at 18.48, Northern Trust appears to be maintaining a solid valuation. The adjusted P/E ratio for the last twelve months as of Q4 2023 is even more attractive at 15.02, suggesting a potentially undervalued stock in comparison to its earnings.
InvestingPro Tips highlight that Northern Trust has revised earnings upwards for the upcoming period according to six analysts, indicating a positive outlook on the company's profitability. Moreover, the company has demonstrated a commitment to shareholder returns, maintaining dividend payments for an impressive 54 consecutive years. This consistency is a strong signal to investors looking for stable income streams. For those seeking deeper insights, there are additional InvestingPro Tips available for Northern Trust, providing a comprehensive analysis of the company's financials and market performance.
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