Just view BK's over-correction as a chance to scoop-up shares of a premiere bank and wealth manager.
Look for BK's 2010 revenue to rise about 7-10%, then about 10-12% in 2011, on higher fees and improving margins. Asset management fees in its equities and fixed income business should record solid increases, on price gains in those markets and due to increased client deposits. New business wins add to the positive mix.
The First Call FY2010/FY2011 EPS estimates for BK are $2.29 to $2.68. Each EPS estimate looks about 5% low, according to my analysis.
Technically, as noted, BK has slid about $8 since testing $33 earlier this spring, and the sustained drop below the key, 50-day moving average is a concern, but BK's demonstrated business model gets the benefit of the doubt here. Further, the stock appears to have held support at/near $25.
2010 Outlook: I view The Bank of New York as a long-term play, but if investors are looking to sell BK within the year, it's probably best to take your profits after it rises to $31-33, if it fails to rise above $34.
Stock Analysis: I consider The Bank of New York Mellon to be a low-risk stock. If an investor has already purchased the company's shares, I'd hold them. If not, I'd consider buying a 50% position in BK now; then buy another 25% in one month, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, I wouldn't buy more than 75% of my BK position before September 2010 and I'd put a sell/stop loss at: $17.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.