An Upside/Downside Scenarios for BNY Mellon
BNY Mellon’s (NYSE:BK) two most important business division – asset servicing and asset & wealth management – accounts for roughly 27% and 26% of the company’s stock value respectively. BNY Mellon primarily competes with State Street (NYSE:STT), JPMorgan Chase (NYSE:JPM) and Citigroup (NYSE:C) in providing investment servicing (asset servicing, issuer services, clearing services) and investment management services to institutional investors around the world.
We have a $35.76 Trefis price estimate for BNY Mellon stock, significantly above the market price. Below we look at the potential upside and downside scenarios for BNY Mellon’s stock.
4% Upside Scenario: $37.25 Trefis Price Estimate for BNY Mellon
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BNY Mellon’s Assets under Custody
We currently forecast BNY Mellon’s AuC will increase from $25 trillion in 2010 to over $43 trillion in the coming years. However, a higher growth in BNY Mellon’s to over $50 trillion driven by a faster than expected growth in emerging markets would mean an upside of 3-4% to the Trefis price estimate.
8% Downside Scenario: $33.12 Trefis Price Estimate for BNY Mellon
BNY Mellon’s Assets under Management
We currently forecast BNY Mellon’s AuM will increase from $1.2 trillion in 2010 to over $2.25 trillion by the end of our forecast driven by rising inflow of funds from emerging markets.
However, a much slower growth to only $1.5 trillion would result in a downside of 7-8% to the Trefis price estimate for BNY Mellon. Such a scenario can come into play as more and more people invest through online brokerage network, which increasingly offer sophisticated value-added services such as advisory, reporting and portfolio tracking thereby reducing funds inflows to asset managers.