State Street Corp (NYSE:STT) — This leading financial company has $2.5 trillion of assets under management, making it one of the leading servicers of financial assets in the world. State Street will, according to Standard & Poor’s, report a relatively flat (0.6%) decline in revenues in 2016 but expects a rebound in 2017 of 4.8%.
In mid-November, S&P IQ raised their 12-month target price by $8 to $85 due to the company’s excellent expense controls and S&P’s estimate of a faster-growing U.S. economy, higher assets under management (AUM), wider interest spreads and slower growth of regulations. They estimate 2016 earnings of $5.03, up from $4.47 in 2015, and $5.81 in 2017.
STT stock has a long-term commitment to share buybacks and dividend increases. S&P kept a four-star “buy” on STT when they adjusted the price target to $85.
After reversing from a low at about $51 in late-June, STT rallied to $68 and consolidated between there until the break from a right triangle at $73 in November. That breakout evolved into an ascending right triangle with resistance at $80, which was overcome last Thursday when the stock broke to a high at $81.91.
The recent break through resistance confirmed that the sharp rally in November was still intact. The target for the recent strength is $90-plus, thus try to buy STT at $80 with $90 as a target for a gain of 12%.
Additional technical note: This chart appeared to some as a Head-&-Shoulders Top with the head at the October high at $73 and a “neck line” at $68.50, a good example of anticipating a break-down of a SHS before it occurred. Instead of a SHS, the formation evolved into a bullish right triangle, breaking up rather than confirming a break down.
