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Morgan Stanley Shares Jump Over 4% as Q4 Profit Tops Estimates

By:
Vivek Kumar
Published: Jan 19, 2022, 16:38 UTC

While Morgan Stanley's fourth-quarter earnings topped equity analysts' forecasts, its revenue failed to meet expectations.

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Shares of Morgan Stanley rose as much as 4.5% on Wednesday after the Midtown Manhattan, New York City-based investment bank reported better-than-expected profits in the fourth quarter, largely driven by an increase in asset management fees.

The Firm’s full-year results reflect both record net revenues of $59.8 billion up 23% year over year and net income of $15.0 billion up 37%. The Firm delivered a full-year ROTCE of 19.8%, the bank said in the press release.

The leading global financial services firm reported quarterly adjusted earnings of $2.01​​ per share, beating the Wall Street consensus estimates of $1.83 per share. The company’s revenue jumped more than 6% to $14.52 billion from a year ago. That missed the market expectations of $14.59 billion.

“The reopening of the economy from COVID-19 has recently led to strong investment banking revenue at Morgan Stanley, while persistent uncertainties over the pace of economic growth and inflation (among other factors) have kept trading revenue high,” noted Michael Wong, Sector Director at Morningstar.

Morgan Stanley also acquired discount brokerage E-Trade and asset manager Eaton Vance that boosted revenue in 2021. While Morgan Stanley will harvest synergies from recent acquisitions and is exposed to positive tailwinds, such as eventually higher interest rates, net revenue will likely reset lower over the next two years.”

Morgan Stanley stock rose over 4% on Wednesday. The stock slumped over 2% so far this year after surging more than 40% in 2021.

Morgan Stanley Stock Price Forecast

Ten analysts who offered stock ratings for Morgan Stanley in the last three months forecast the average price in 12 months of $118.50 with a high forecast of $140.00 and a low forecast of $104.00.

The average price target represents a 23.21% change from the last price of $96.18. From those ten analysts, six rated “Buy”, four rated “Hold” while none rated “Sell”, according to Tipranks.

Citigroup increased the price target to $125 from $115. BofA Global Research raised the price objective to $125 from $115. Piper Sandler lifted the target price to $112 from $110. JPMorgan upped the target price to $108 from $103.

Technical analysis also suggests it is good to buy as 100-day Moving Average and 100-200-day MACD Oscillator signals a strong buying opportunity.

Analyst Comments

“4Q21 adj EPS equalled $2.08 vs Cons of $1.91. Revenues of $14.5B came in modestly ahead of Cons by +$280M with modest beats in S&T and IM, while IB and WM were generally in line. The comp ratio of 37.8% was modestly better than Cons of 40.8% (ISG Comp ratio down ~950bps q/q). Morgan Stanley (MS) increased its long term ROTCE target to 20%+ (up from 17%+), which compares with 20% in 2021,” noted Daniel T. Fannon, equity analyst at Jefferies.

Check out FX Empire’s earnings calendar

About the Author

Vivek has over five years of experience in working for the financial market as a strategist and economist.

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