Rafferty Capital Bullish On State Street Corporation

Analysts at Rafferty Capital Markets upgraded shares of State Street Corp STT to a Buy rating and $82 price target Monday.

Richard Bove highlighted causes for the upgrade:

Analysts find that “An incredible 78.5% of the firm’s owned assets are either in cash or relatively low yielding securities. Low interest rates devastate the returns on these funds.” As interest rates begin to rise, State Streets’ shares become more admirable. Analysts expect interest rates to begin to rise in second quarter 2015.

Bove also noted,”In a higher interest rate environment, the company’s history indicates
that the NIM (net interest margin) could easily be 100 basis points higher. This is $2 billion in pretax earnings or an estimated 100% increase in earnings.”

Shares of State Street Corp closed Mondays session at $70.34 up 0.3 percent.