New York, NY– BofA Securities raised its price target for Bank of New York Mellon (NYSE: BK) to $66.00 per share, maintaining a “Buy” rating on the stock. This adjustment follows BNY Mellon’s first-quarter earnings report exceeding analyst expectations.
The bank’s core EPS of $1.29 surpassed both BofA’s ($1.21) and consensus ($1.18) estimates. This strong performance was driven by higher-than-anticipated fees (up 2.8% and 3.7% compared to BofA and consensus forecasts, respectively) and net interest income (up 2.9% and 1.7% compared to benchmarks).
While credit costs were higher than expected ($27 million vs. $10 million and $8.9 million forecasts), BNY Mellon management reaffirmed their 2024 guidance. This includes a 10% year-over-year decline in net interest income, flat core expenses, and a commitment to exceeding 100% capital return.
BofA’s price target adjustment reflects minor tweaks to BNY Mellon’s earnings per share forecast. Their valuation approach considers both 2024 estimated earnings and tangible book value.
Investor Takeaways
This positive earnings report and BofA’s target increase offer valuable insights for investors. BNY Mellon’s management demonstrates confidence through share buybacks and consistent dividend hikes for 13 years, backed by a 54-year dividend payment history.
The stock’s current P/E ratio (13.85) and adjusted P/E (10.73) suggest potential undervaluation relative to near-term earnings growth. Additionally, the 33.62% total return over the past six months reflects strong investor sentiment.
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