Good News Comes In 3s For State Street; EPS Beat, Income Higher, Guidance Improved

Barclays provided its 2Q16 EPS review on State Street Corp (NYSE: STT) in its report published Thursday.

The company posted 2Q16 operating earnings of $1.46 per share, beating Barclays' estimate of $1.26. Relative to expectations, higher net interest margins (declined just 1bp), lower expenses and a lower tax rate drove the beat.

The company reported 5 percent gain in fee income relative to the first quarter, a 1 percent increase in core net interest income, seasonally lower expenses (-6 percent; compensation, IT), a lower tax rate (-210bps) and an improved ROE of 12.3 percent up from 8.4 percent in 1Q.

Related Link: GE Completes Its GE Asset Management Divestment To State Street

The analysts lifted their 2016 EPS estimate to $4.95 from $4.80, as "this quarter's EPS beat is somewhat tempered by a higher expected tax rate in the out-quarters, in addition to a still challenging rate backdrop." They kept the 2017 EPS estimate unchanged at $5.35.

Barclays currently has an Overweight rating on the shares with $71 price target.

At time of writing, State Street was up 2.07 percent on the day, trading at $65.07.

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