Raymond James Downgrades Northern Trust On Outlook Concerns

Although Northern Trust Corporation NTRS reported a fourth-quarter EPS and revenue beat, Raymond James downgraded the stock and reduced its estimates for the company to reflect a higher expense base.

The Analyst

Analyst David Long downgraded Northern Trust from Strong Buy to Market Perform and removed a $103 price target. 

The Thesis

Northern Trust reported Q4 EPS of $1.80 Wednesday. Excluding tax benefits and a restructuring charge, the EPS would have been $1.68, which is still higher than the consensus of $1.64, Long said in a Thursday note.

The EPS beat was driven by higher net interest income and a lower loss provision, the analyst said. 

The financial services company also reported revenue that was ahead of expectations, driven by higher net interest income and a larger balance sheet.

Revenue growth could moderate with the lack of interest rate hikes and uncertain market performance, Long said, adding that Northern Trust’s expenses rose during the quarter.

“Despite a moderate revenue growth outlook, we expect Northern to maintain investments for growth, which will position it well for long-term profitability."

Raymond James reduced its EPS estimates for 2019 by 4 cents to $6.35 and by 7 cents to $7 for 2020.

Price Action

Northern Trust shares were down 1.21 percent to $88.84 at the time of publication Thursday.

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