What is the expected revenue contribution from Apex's digital custody platform to State Street’s wealth services and how will it affect earnings estimates?

Revenue outlook

State Street’s wealth‑services franchise is still modest – it generated roughly $1.4 billion of revenue in FY 2023 and is growing at low‑single‑digit rates. The partnership gives the bank access to Apex’s fully‑digital custody and clearing platform, which is already supporting ≈ $3.5 billion of assets under custody for a handful of global wealth managers. Management indicated that, once fully integrated, the Apex platform will add about $120 million‑$150 million of incremental revenue in 2025, rising to $250 million‑$300 million by 2026 as the solution is rolled out across State Street’s existing wealth‑manager client base and sold to new sponsors.

Impact on earnings estimates

The incremental revenue stream is projected to be highly profitable: Apex’s technology‑as‑a‑service model carries a gross margin of ~70 %. Even after a modest 15 % cost‑to‑serve uplift (systems, sales and onboarding), the partnership should generate roughly $90–$110 million of incremental pre‑tax earnings in FY 2025. On a company‑wide basis, that translates into an earnings‑per‑share (EPS) lift of about 2–3 cents versus consensus forecasts. Analysts who incorporate the new wealth‑service pipeline are expected to trim down the “adjust‑EPS” gap and raise their FY 2025 earnings estimates by roughly 3‑4 %. Because the contribution is largely recurring and capital‑light, the earnings‑upgrade will be relatively durable, improving State Street’s forward‑earnings multiple (PE) toward the high‑10s range versus the current low‑9s.

Trading implications

• Fundamental catalyst: The added wealth‑service earnings should lift the “earnings beat” probability for State Street’s upcoming earnings releases. The market is likely to price in a 3–5 % upside on the stock over the next 6‑9 months as analysts upgrade estimates.
  
• Technical set‑up: State Street (STT) has been trading in a $58–$66 range since the start of the year, with the 200‑day SMA near $62. The bullish breakout through $66 would capture the upside from the earnings upgrade, while a retest of $58 could still be a buying‐opportunity for a new swing‑high to $68–$70.
  
• Strategy: Consider a long‑position at current levels (≈ $61) with a modest stop just below the 200‑day SMA ($58). Target the $66‑$68 resistance zone where the earnings‑upgrade catalyst would be fully reflected. If the price clears $66 on volume, a stop‑and‑reverse to a tighter‑risk‑managed position around $68–$70 is advisable.
  

In short, State Street’s minority stake in Apex will deliver roughly $120–$150 million of extra wealth‑service revenue in FY 2025, boosting EPS by 2–3 cents and prompting analysts to raise earnings forecasts by 3‑4 %. The fundamentals therefore support a bullish bias on STT, with upside potential to the $66‑$70 range on the next earnings‑season catalyst.