On Wednesday, Evercore ISI adjusted its price target on shares of Northern Trust (NASDAQ:NTRS), reducing it to $86.00 from the previous $87.00, while retaining an In Line rating.
The adjustment follows Northern Trust's recent earnings report, which reflected a solid performance with strong market conditions benefiting most of the company's business segments and net interest income (NII) exceeding expectations. Despite these positive aspects, Northern Trust's stock experienced a roughly 5% decline, lagging behind its closest competitor by 250 basis points.
The firm's financial results showed that while compensation expenses were slightly higher, there is an anticipation of increased costs in software and other line items in the second quarter. Additionally, the forecast for 2024 is trending above the management's goal of a 5% year-over-year operational expense growth, partially due to the influence of stronger markets.
On a brighter note, the management commentary regarding NII was optimistic, fueled by Northern Trust's performance that surpassed forecasts. Management also indicated that non-interest-bearing deposit balances might stabilize and that pricing pressure could lessen.
Furthermore, the asset servicing segment reported new business growth with satisfactory margins, and there was positive momentum in liquidity, bonds, and alternative investments within the asset management division. The wealth management sector also saw an increase in client relationships, particularly in the global family office, with expectations for ongoing organic growth.
Despite these positive indicators, there are factors that may cause concern for investors. The equity and bond markets have started the current quarter on a lower note, and the 10-year U.S. Treasury yield has risen by 30 basis points in April.
InvestingPro Insights
Northern Trust (NASDAQ:NTRS) has been a topic of discussion after Evercore ISI's recent price target adjustment, and investors are keenly observing the company's performance. According to InvestingPro data, Northern Trust has experienced a large price uptick over the last six months, which aligns with the positive momentum mentioned in the management commentary. In addition, analysts have shown confidence in the company by revising their earnings upwards for the upcoming period, suggesting that the market's recognition of Northern Trust's potential is growing.
InvestingPro Tips reveal that Northern Trust has maintained dividend payments for 54 consecutive years, which can be a reassuring sign for investors looking for stability in their investments. Moreover, despite concerns about weak gross profit margins, analysts predict that Northern Trust will remain profitable this year, having been profitable over the last twelve months as of Q1 2023.
For those looking to delve deeper into Northern Trust's financial health and future prospects, there are additional InvestingPro Tips available at https://www.investing.com/pro/NTRS. Readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, gaining access to a comprehensive analysis that can guide investment decisions. There are 6 additional tips listed in InvestingPro for Northern Trust, offering further insights into the company's performance and market position.
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