Passive Investing And Fee Pressures Will Squeeze Profit Margins

Driven by robust AUC/A growth, improving profitability, and positive market and revenue trends—partially offset by skepticism around deal speculation and regulatory hurdles—analysts have raised Northern Trust’s price target from $117.79 to $122.17.

Analyst Commentary

• Bullish analysts cite robust growth in assets under custody/administration (AUC/A) at Northern Trust, outpacing peers when market effects are stripped out.
• Positive price target revisions reflect benefits from sizable market tailwinds, recent global equity market recovery, and increases in managed asset levels boosting both fees and balance sheet-driven revenue.
• Several price target increases are supported by strong relative profitability, improved risk profile compared to peers, and favorable current economic expectations for trust and investment banking revenues.
• Deal speculation has significantly driven up shares, but Bearish analysts argue the rally fully values the stock and diminishes the economics for any potential merger premium; regulatory and antitrust scrutiny is also seen as a potential hurdle for a BNY-Northern Trust deal.
• Strategic rationale for a merger—particularly with BNY Mellon—is compelling in terms of scale and integrating Northern's wealth management capabilities, but analysts note complicated deal math, uncertain willingness of Northern, potential alternative bidders, and possible impact on company morale.

What's in the News

• Goldman Sachs held preliminary takeover talks with Northern Trust earlier in 2025, but both parties have since downplayed the likelihood of a deal, with Northern Trust’s CEO reportedly dismissive and Goldman focusing elsewhere (New York Post, Semafor).
• Goldman Sachs' acquisition hunt included advanced talks for private-markets specialist Cliffwater, which ultimately collapsed over price, while discussions involving Northern Trust remain speculative (Semafor).
• Goldman is more likely to focus on alternative targets such as State Street and BNY Mellon, and is also actively pursuing opportunities in private credit and non-bank lending sectors (New York Post).
• Bank of New York Mellon approached Northern Trust to express interest in a potential merger, though no formal offer has been made and discussions have thus far been preliminary (Wall Street Journal).
• In response to M&A speculation, Northern Trust publicly stated it remains “fully committed to remaining independent” (Reuters).

Valuation Changes

Summary of Valuation Changes for Northern Trust

• The Consensus Analyst Price Target has risen slightly from $117.79 to $122.17.
• The Consensus Revenue Growth forecasts for Northern Trust has significantly risen from -1.6% per annum to 3.6% per annum.
• The Net Profit Margin for Northern Trust has significantly risen from 17.59% to 21.04%.