How Investors May Respond To State Street (STT) Acquiring Mizuho’s Global Custody Assets

• State Street Corporation announced it has completed the acquisition of Mizuho Financial Group’s global custody and securities services businesses outside Japan, adding approximately US$580 billion in assets under custody and US$24 billion in assets under administration.
• This transfer markedly expands State Street’s international securities services footprint and represents a significant operational development for supporting overseas client investments.
• We’ll explore how taking on Mizuho’s offshore custody business supports State Street’s position in global asset servicing and future growth prospects.

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State Street Investment Narrative Recap

To be a State Street shareholder, you need to believe that institutional trends toward global outsourcing and the rising complexity of asset servicing allow the company to profit from scale, technology, and long-standing client relationships. The acquisition of Mizuho’s offshore custody business should reinforce State Street’s global reach, but does not fundamentally alter the primary near-term catalyst, expanding servicing and fee revenues, nor meaningfully change the most significant risk: ongoing fee compression in passive and ETF investing.

Among recent announcements, the September 3 partnership with Apex Fintech to offer digital custody and clearing aligns closely with the Mizuho acquisition by addressing evolving client needs in global and digital asset servicing. This move is particularly timely as new business growth and servicing fee expansion remain core profit drivers amid pressure to adapt to industry change.

On the other hand, investors should be aware that accelerating advances in blockchain settlement and tokenization could...

Read the full narrative on State Street (it's free!)

State Street's outlook anticipates $14.7 billion in revenue and $3.5 billion in earnings by 2028. This is based on a 3.3% annual revenue growth rate and an $0.9 billion increase in earnings from the current $2.6 billion.

Uncover how State Street's forecasts yield a $117.50 fair value, in line with its current price.

Exploring Other Perspectives

Simply Wall St Community members have submitted seven fair value estimates for State Street ranging from US$48 to an outlier of US$248,122. Against this wide spectrum of opinions, fee compression in passive and ETF products continues to be a pressing issue that could limit the company’s future earnings growth in a competitive market.

Explore 7 other fair value estimates on State Street - why the stock might be worth less than half the current price!

Build Your Own State Street Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your State Street research is our analysis highlighting 5 key rewards and 2 important warning signs that could impact your investment decision.
• Our free State Street research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate State Street's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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