Shares of State Street Corporation (STT - Free Report) crafted a new 52-week high, touching $67.40 in the first half of the trading session on May 28. The closing price of this global banking major reflected a solid year-to-date return of 39.6%. The trading volume for the session was 5.0 million shares, significantly higher than the average 3.1 million shares over the last 3 months.
Despite the price appreciation, this Zacks Rank #3 (Hold) stock still has plenty of upside left, given its strong estimate revisions over the last 60 days and the expected year-over-year earnings growth of 14.5% for 2013.
Moody’s – the rating division of Moody's Corp. (MCO - Free Report) – had upgraded its outlook on the banking sector, and this primarily drove State Street to achieve the new high. Additionally, impressive first-quarter 2013 results and solid capital deployment activities were the other positives.
After 5 years, Moody’s upgraded the banking sector outlook to ‘Stable’ from ‘Negative’ on May 28. The change was based on overall improvement in operating environment, and lower downside risks to banks from any future economic crisis.
On Apr 19, State Street reported first-quarter 2013 earnings of 96 cents per share, beating the Zacks Consensus Estimate of 93 cents and the prior-quarter earnings of 84 cents. Better-than-expected results came on the back of an increase in fee income, partially offset by higher operating expenses and a decrease in net interest income.
Estimate Revisions Show Potency
For State Street, over the last 60 days, 12 of the 16 estimates for 2013 have been revised upward, raising the Zacks Consensus Estimate by 3% to $4.52 per share. For 2014, 9 of the 16 estimates moved north, helping the Zacks Consensus Estimate advance 3% to $5.15 per share.
Better performing banks include JPMorgan Chase & Co. (JPM - Free Report) and Zions Bancorp. (ZION - Free Report) , both of which carry a Zacks Rank #2 (Buy).