State Street (NYSE:STT) Enhanced by Securities Sale

State Street (NYSE:STT) should benefit in several areas from its securities sale, according to Barclays (NYSE:BCS), although margins will remain under pressure.

Barclays said, "STT believes its securities sale will: a) increase its balance sheet flexibility in deploying its capital (presumably at higher rates); b) enhance its Basel capital (BBB and below rated securities receive punitive risk weightings); and c) reduce its exposure to certain asset classes (AAA/AA concentration goes from 82% to 88%).

"We are maintaining our 2010 operating EPS estimate of $3.40 ($0.86 operating in 4Q; $0.15 reported). We are lowering our 2011 EPS estimate by $0.20 (5%) to $3.75 to reflect our expectations of lower net interest margin, only partially mitigated by its expense reduction program."

Barclays maintains an "Overweight" on State Street, which closed Friday at $45.93, up $0.19, or 0.42 percent. They have a price target on them of $57.