Bank of New York Mellon (BNY) showed clear organic growth momentum in Q2 as it delivered its 10th consecutive quarter of strong positive operating leverage, Morgan Stanley said in a note Thursday.

Net interest income grew 20% and fees increased 13%, while expenses rose 7% year on year during the quarter, pushing operating leverage to almost 600 basis points, compared with consensus of 344 bps, the investment firm said.

Pre-tax margin and ROTCE also continued to increase, topping medium-term targets and potentially leading to an outlook raise, Morgan Stanley said.

The firm also noted that Bank of New York Mellon's higher 2026 revenue and net interest income outlook already incorporates conservatism to account for a range of scenarios, like a seasonal decline in Q3 deposits.

Morgan Stanley raised its price target to $151 from $147, and has an equal-weight rating on Bank of New York Mellon.

Price: 160.25, Change: -2.10, Percent Change: -1.29