Raised 2026 guidance and $10.70 of 2027 earnings at 13.8 times produce a $148 stock. That is a market-like return from $143, including the dividend.
Key points
- $5.68 billion of third-quarter revenue, up 12% year over year, with pretax margin 38.5%.
- 12.5% full-year 2026 revenue growth now guided at the midpoint, with NII up 15%.
- $10.70 of 2027 earnings at 13.8 times is $148, about 3% above $143 plus a 1.7% yield.
The call
The $143 share needs about $10.60 of 2027 earnings at 13.5 times, the same band I used on State Street. Trailing four-quarter earnings of $9.05 already imply nearly 16 times, so the market is paying for another year of mid-teens EPS growth and a still-high payout.
I model $10.70 instead: 7% revenue growth after this year’s 12% sprint, a 39% pretax margin, and a 4% smaller share count. Reinvestment of about $5 billion of securities a quarter still helps net interest income, but deposit mix and unquantified Trump Accounts pass-throughs cap the multiple.
Diluted EPS by quarter and my 2027 run-rateCompany supplements through 3Q26; 4Q26E and 2027E are mine
Valuation
| Item | Figure |
|---|
| 2026E revenue | $22.6 billion |
| 2027E revenue | $24.2 billion |
| 2027E pretax margin | 39% |
| 2027E diluted EPS | $10.70 |
| Multiple | 13.8 times |
| 12-month target | $148 |
Custody and clearing peers trade 12, 14 times forward earnings. 13.8 times is fair if operating leverage stays near 400 basis points. Asymmetry is thin: a 15-times multiple on the same earnings is $160; a 12-times multiple is $128.
Risks
- Deposit balances stay seasonally weak into 2027; watch average deposits versus the $311 billion third-quarter level.
- Issuer Services fee growth includes unstated Trump Accounts pass-throughs; watch corporate-trust fees versus expenses.
- Tier 1 leverage at 5.7% sits near the 5.5%, 6% operating range; a further AOCI hit would slow buybacks.
What would change my mind
A clean 2027 revenue guide above 9% with leverage still near 500 basis points would justify 15 times and a buy.