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State Street Climbs On Q1 Earnings, But Hedge Fund Woes Offset ETF Flows & New

2017-06-05 19:59 [INVESTING] Source:Netword
Guide:State Street reported a mixed first quarter, as earnings per share were better than expected, but revenues were slightly below consensus estimates.

State Street (STT) is higher Wednesday, on a better-than-expected first quarter earnings.

Illustration: Pixabay

The firm said it earned $1.15 a share on revenue that grew 7.4% year over year, to $2.67 billion. Analysts were looking for the company to earn $1.10 a share on revenue of $2.74 billion.

Like its peers, State Street got a boost from market gains, as well as inflows into asset managers and ETFs, although its hedge funds continued to struggle. All told, ETF inflows of $12 billion were offset by $26 billion in institutional outflows. However, assets under custody grew 11% to $29.93 trillion.

As The Wall Street Journal’s Austen Hufford reports, the company has also been pushing into socially responsible investing:

Last month, State Street begin pushing big companies to put more women on their boards by demanding change at firms without any female directors. The company was also responsible for placing the now-viral "Fearless Girl" statue of a young girl facing Wall Street's iconic bronze bull. The company is also developing a tool for asset managers, pensions and endowments that lets them screen investments for environmental, social and governance risks, aimed at capitalizing on the appetite for responsible investing.

CFRA’s Angelo Zino reiterated a Hold rating and $85 price target on the stock:

We keep our '17 EPS estimate at $5.81 and '18's at $6.65. STT posts Q1 EPS of $1.21 vs. $0.98, beating the $1.10 consensus. Sales rose 8%, slightly better than expected, on higher fee revenue growth, reflecting an 11% increase in assets under custody and administration. We note a 2.6% increase in net interest income (20% of sales) and anticipate a more favorable U.S. interest rate environment supporting growth. We positively view operating leverage potential on tight cost controls.

State Street is up 3.7% to $83.63 in recent trading.

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