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Bank of New York Mellon (BNY) Could Be 10% Undervalued On Ripple Custody Expansion

Simply Wall St · 4d ago

Ripple’s expanded collaboration with Bank of New York Mellon Corporation (BNY) puts digital asset custody, XRP Ledger access and RLUSD stablecoin support directly on BNY’s institutional platform, following the October 27 announcement.

For context, BNY shares trade at US$147.78, with the stock delivering a 26.26% year-to-date share price return and a 39.06% total shareholder return over 1 year. The 3-year total shareholder return of roughly 2.5x signals longer-term momentum that contrasts with a softer 90-day share price move that fell 5.76%.

Scan other institutions leaning into blockchain and custody with a curated set of 17 cryptocurrency and blockchain stocks that echo the themes behind Bank of New York Mellon Corporation’s latest move with Ripple.

So after a strong multi year total return and a fresh push into Ripple powered custody, does the current price still leave Bank of New York Mellon Corporation offering enough upside for the risk you are taking on?

Most Popular Narrative: 9.5% Undervalued

Bank of New York Mellon Corporation’s most followed valuation narrative pins fair value at about $163.36, compared with the latest close of $147.78. This frames the Ripple partnership inside a wider push on digital infrastructure, efficiency and fee resilience.

Accelerated investment in digital platforms, including the AI supported platform operating model funded by roughly US$4b of annual engineering spend and hundreds of AI use cases, is now showing up in 600 basis points of positive operating leverage in the first half of 2026. This can continue to influence net margins and earnings as capacity creation allows more revenue on a relatively fixed employee base.

See why 44 investors see Bank of New York Mellon as 10% undervalued.

Using a 9.83% discount rate, that popular narrative ties Bank of New York Mellon Corporation’s fair value to assumptions about mid single digit annual revenue growth, margin expansion toward roughly 30%, and a future P/E of about 18.4x on earnings that analysts project out to 2029. Those inputs also assume modest annual share count reduction and leave the current analyst consensus target of around $163 in line with this fair value estimate.

The key question for anyone looking at BNY is whether the firm can keep translating its spending on digital platforms, custody capabilities and multi product client relationships into the organic growth and operating leverage embedded in these forecasts without letting costs run ahead of revenue. If you think those conditions hold, the gap between the $147.78 share price and the $163.36 narrative fair value gives you a reference point for judging whether the Ripple powered custody move is already reflected in expectations or still underappreciated.

Result: Fair Value of $163.36 (UNDERVALUED)

Still, the story around Bank of New York Mellon Corporation frays quickly if fee pressure in asset servicing bites harder than expected, or if sector wide multiple compression pulls that 18.4x P/E assumption lower.

Find out about the key risks to this Bank of New York Mellon narrative.

Next Steps

If this all sounds cautiously optimistic on Bank of New York Mellon Corporation, that is the point. However, you still need your own read on the trade off. Run through the optimism and pressure points yourself, then stress test those views against the 5 key rewards.

Looking for more investment ideas beyond Bank of New York Mellon Corporation?

If you are serious about sharpening your next move, do not stop at Bank of New York Mellon Corporation when the Simply Wall Street Screener can surface fresh ideas tailored to your style.