Raised 2026 fee and NII growth still leave 2027 earnings near $14.80 a share. At 12.3 times that is $182, an 9 percent return from $167.
Key points
- $3.69 third-quarter diluted EPS, 33% above a year ago, on $4.00 billion of revenue.
- 13, 14% fee-revenue growth and 15, 16% NII growth now guided for 2026, with more than 500 bp of operating leverage.
- $14.80 of 2027 EPS is my base; 12.3 times that earnings is a $182 stock.
The call
The $167 share needs about $13.40 of 2026 earnings at 12.5 times, or $14.80 of 2027 earnings at 11.3 times. Markets are neither stretching nor punishing the custody franchise after a 4% drop on the print.
I model $13.38 of 2026 EPS and $14.80 in 2027 as buybacks shrink the share count toward 268 million and pre-tax margin holds near 35%. A 12.3 times multiple, in line with the stock’s own recent band and below BNY, produces $182, a market-like twelve-month return.
Diluted EPS by quarter ($)Company reports through Q3 2026; Q4 2026E–Q4 2027E are my forecasts.
Valuation
| Line | Figure |
|---|
| 2026 EPS (mine) | $13.38 |
| 2027 EPS (mine) | $14.80 |
| Multiple on 2027 | 12.3 times |
| 12-month target | $182 |
| Implied return from $167.25 | 9% |
| Dividend, last twelve months | $3.44 (2.1% yield) |
Twelve times next-year earnings is a fair bank-custody multiple when ROTCE is already 25% and CET1 is 11.0%. Upside is limited if equities stall; downside is a 10, 15% multiple cut if markets fall. That payoff is a hold, not a buy.
Fee revenue and NII ($ billions)Addendum and 10-Qs through Q3 2026; Q4 2026E–Q4 2027E are my forecasts.
Risks
- Equity and rate declines cut servicing fees and NII; watch AUC/A and NIM each quarter.
- Fee compression or delayed Alpha installs stall organic growth; watch the $332 million servicing backlog.
- CET1 at 11.0% could slow buybacks if deposits or RWA jump; watch the standardized ratio.
What would change my mind
A 2027 EPS path above $16 with CET1 still above 11% would support a buy; a drop below $13 would make the stock a sell.