Bank of New York Mellon Corp (NYSE:BK) — Bank of New York Mellon is a global financial services company. It provides asset management, wealth management, and other financial assistance, including clearing services to corporations and high-net worth clients.
Last Thursday, a host of rating agencies increased targets and earnings estimates on BK, including Fitch Ratings, Zacks and Moody’s. They varied in their earnings estimates and targets for the stock, but all were higher in every respect. The average estimate for 2016 is $3.14 per share, up from $2.71 last year, and the average for next year is now $3.42. Standard & Poor’s raised its opinion from a 3-Star (Hold) to a 4-Star (buy).
Federal Reserve Governor Jerome Powell said BK has been chosen to be the sole provider of settlements in government bonds following the exit by JPMorgan Chase & Co. (NYSE:JPM). This will provide more scrutiny of the bank by the Fed, but also provides more income and prestige as the sole clearing agency for the U.S.
S&P in a recent report said that it was impressed by BK’s third-quarter revenues, which rose 4% year-over-year. The bank’s Q3 earnings beat Capital IQ’s consensus forecast of 81 cents, reporting 90 cents. BK has increased earnings each of the past four years.
BK Stock Chart
Technically, Bank of New York Mellon has been in a sideways triangle since June with support at about $39 and resistance at the low $40s. However, on the announcement of better Q3 earnings and the many upgrades by Wall Street analysts, BK stock shot through resistance on three days of very high volume.
The stock opened a breakaway gap from $40.48 to $41.47, which could cause some profit-taking and provide a buying opportunity for investors and traders seeking to benefit from the unusually good news.
Try to buy BK at $42 with a trading goal of $48 for a proposed gain of over 14%. Investors, however, may want to hold BK as a cornerstone investment in the financial services industry.
