Goldman Sachs upgrades Northern Trust stock rating on improved outlook

Investing.com - Goldman Sachs upgraded Northern Trust (NASDAQ:NTRS) to Neutral from Sell on Monday and raised its price target to $151 from $148.

The firm revised its earnings per share estimates for the company to $10.37 for 2026, $11.51 for 2027, and $12.89 for 2028, up from prior estimates of $10.34, $11.45, and $12.82, respectively. The new estimates represent approximately 3% upside to consensus.

Goldman Sachs cited an improved net interest income outlook supported by stronger than expected deposit balances and a more favorable interest rate trajectory, particularly from the European Central Bank and Bank of England. The firm also pointed to a better net interest income backdrop that should amplify Northern Trust’s margin profile.The upgrade comes as Northern Trust shares have delivered a 69.55% return over the past year, reflecting strong momentum in the stock. According to InvestingPro Tips, the company has maintained dividend payments for 56 consecutive years, currently yielding 2.25%.

The upgrade factors in incremental capital return and share count reduction capacity, supported by the expected monetization of the remainder of Northern Trust’s Visa position, which Goldman Sachs estimates at approximately $680 million after tax.

The revised price target of $151 is based on roughly 13 times Q5-Q8 price-to-earnings ratio, approximately in line with historical averages. The target implies 7% upside at current levels. The stock currently trades at a P/E ratio of 16.23, while InvestingPro analysis suggests Northern Trust remains undervalued, appearing on the platform’s most undervalued stocks list. For deeper insights, investors can access Northern Trust’s comprehensive Pro Research Report, one of 1,400+ available for US equities on InvestingPro.

In other recent news, Northern Trust reported fourth-quarter 2025 core earnings per share of $2.62, surpassing market expectations due to stronger pre-tax pre-provision income and lower provision expense. This strong performance led RBC Capital to raise its price target for Northern Trust to $159, citing robust revenue growth and positive operating leverage. Similarly, TD Cowen increased its price target to $175, maintaining a Buy rating on the company. BMO Capital also upgraded Northern Trust’s stock rating to Outperform from Market Perform, following a strategic shift by the company.

Additionally, Northern Trust has made significant leadership appointments. Jessica Donohue was named head of Asset Servicing, Americas, and will report to Clive Bellows, co-president of Northern Trust Asset Servicing. In a newly created role, Gijsbert de Lange was appointed as the chief innovation strategist for Northern Trust Asset Management, focusing on embedding advanced AI technologies into the firm’s investment strategies. These developments reflect Northern Trust’s ongoing efforts to enhance its strategic positioning and operational capabilities.

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