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Northern Trust (NASDAQ:NTRS) stock gained 2% in Tuesday morning trading after Bank of America analyst Ebrahim Poonawala reinstated coverage on the bank with a Buy rating.
The sell-side analyst argued that the stock’s valuation, at 11 times 2024 price-to-earnings estimate vs. 16x five-year pre-pandemic median, does not reflect the company’s franchise quality.
“While we acknowledge the downside risks to EPS/ROE due to deposit costs and equity/bond market volatility, we see these as reflected in the valuation and consider NTRS well positioned to navigate the cycle,” Poonawala wrote in a note.
Year-to-date, NTRS retreated 25.2%, compared with the S&P 500’s 13.4% climb. SA’s Quant system gave the stock a Valuation Grade of “C-,” with some of the poorest marks in price-to-earnings and price-to-book ratios.
