How will the expanded partnership with Columbia Threadneedle affect State Street's revenue and earnings guidance?

Impact on Revenue & Earnings Guidance

The new Columbia Threadneedle engagement adds $431 billion of pooled‑fund assets that will now flow through State Street’s fund‑accounting, administration and custody platform. Historically, State Street earns roughly 0.04 %–0.06 % of assets under administration (AUA) in service fees for these core back‑office functions. Applying the midpoint of that range to the newly‑covered $431 bn suggests $170 mm–$260 mm of incremental annual revenue (≈ $215 mm at 0.05 %). Because the services are largely high‑margin, the contribution to operating profit is expected to be close to the full fee amount after modest incremental staffing and technology costs, translating into an incremental EPS boost of roughly $0.12–$0.15 for FY 2025 (based on 1.8 bn shares outstanding).

Given State Street’s prior guidance of $5.5 bn–$5.8 bn of net revenue for the year, the partnership is likely to push the midpoint above the upper end of the existing range. Management will probably raise its FY 2025 revenue guidance by ≈ $200 mm and lift earnings guidance by $0.10–$0.13 per share, positioning the outlook as “slightly above prior expectations” without materially altering the full‑year guidance framework.

Trading Implications

• Fundamentals: The fee‑run‑rate upgrade is recurring and low‑cost, supporting a higher forward‑PE and a more resilient earnings profile. Analysts who had a neutral stance may upgrade to Buy/Outperform, driving the stock modestly higher.
  
• Technicals: State Street has been trading in a tight range around the 200‑day EMA (~$71). The earnings‑upgrade catalyst can act as a breakout trigger; a close above the $72.50–$73.00 resistance level would likely see the price test the next resistance near $76 (the prior high). A break below the 50‑day EMA (~$70) could signal a short‑term retrace, but the fundamental tailwind reduces downside risk.
  
• Actionable Play: Consider adding to long positions on pull‑backs to the 50‑day EMA with stop‑losses just below $68, targeting the $74–$76 zone. For risk‑averse traders, a bull‑call spread (e.g., buy $72 call, sell $78 call) captures upside while limiting premium outlay. The partnership’s revenue lift makes the upside bias compelling, with limited downside given the high‑quality, fee‑based nature of the new business.