Passive Investing And Fee Pressures Will Squeeze Profit Margins

Analyst price targets for Northern Trust rose to $124.25 as bullish views center on superior long-term asset growth, improved profitability from market tailwinds, and renewed M&A speculation, though the stock’s recent rally and regulatory hurdles temper upside expectations.

Analyst Commentary

• Bullish analysts are raising price targets on Northern Trust due to strong long-term growth in assets under custody/administration, which significantly outpaced peers since the post-GFC period, benefiting from rising equity and fixed income markets.
• Recent equity market recovery and higher interest rate expectations have boosted managed assets, fee income, and balance sheet-driven revenue for trust banks, supporting higher profitability for Northern Trust.
• There is increasing M&A speculation after BNY Mellon reportedly approached Northern Trust about a merger, with analysts citing compelling strategic rationale given potential for scale benefits and wealth management growth, though regulatory/antitrust challenges remain a key risk.
• Recent Northern Trust stock rally—partly driven by deal rumors—has led some bearish analysts to see shares as fully valued, noting diminished economics for a takeout premium and suggesting upside may now be limited unless a competitive bidding process emerges.
• Despite positive deal logic, consensus among major analysts is that a potential merger would be complicated, may encounter regulatory hurdles, and that the leak of M&A news may be an attempt to solicit additional bids from parties such as Goldman Sachs, Morgan Stanley, or Canadian banks.

What's in the News

• Goldman Sachs considered takeover talks with Northern Trust earlier in 2025 but discussions have cooled, with State Street and BNY Mellon also discussed as potential acquisition targets for Goldman (NYP, Semafor).
• Northern Trust's CEO and Goldman Sachs management both appear dismissive of immediate acquisition prospects between their firms (NYP).
• BNY Mellon approached Northern Trust to discuss a possible merger but no formal offer or specific terms were discussed (WSJ).
• Northern Trust publicly stated it is "fully committed to remaining independent" following the merger approach from BNY Mellon (Reuters).
• Talks between Goldman Sachs and private-markets specialist Cliffwater advanced further than those with Northern Trust but ultimately failed over price (Semafor).

Valuation Changes

Summary of Valuation Changes for Northern Trust

• The Consensus Analyst Price Target remained effectively unchanged, moving only marginally from $122.17 to $124.25.
• The Future P/E for Northern Trust remained effectively unchanged, moving only marginally from 15.14x to 15.39x.
• The Discount Rate for Northern Trust remained effectively unchanged, moving only marginally from 10.01% to 10.09%.