Morgan Stanley (MS) Stock: Earnings Beat Expectations as Wealth Management Fuels Growth

TLDR

• Morgan Stanley reported Q4 earnings of $2.68 per share, beating analyst estimates of $2.44, with revenue of $17.89 billion exceeding expectations of $17.77 billion.
• Wealth management drove results with $8.4 billion in net revenue, up from $7.5 billion a year ago, while total client assets reached $9.3 trillion.
• Investment banking revenue jumped 47% to $2.41 billion, driven by stronger advisory fees and increased M&A activity across all regions.
• The bank bought back $1.5 billion in stock during Q4 and $4.6 billion for the full year under its share repurchase program.
• Morgan Stanley shares gained 38% over the past 12 months but fell nearly 3% this week as other banks reported results.

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Morgan Stanley posted fourth-quarter earnings that topped Wall Street estimates on Thursday. The results were driven by strong performance in wealth management and investment banking.

The bank reported earnings of $2.68 per share. Analysts had expected $2.44 per share. Revenue came in at $17.89 billion, beating the $17.77 billion estimate.

Net income for the quarter rose to $4.40 billion. That’s up from $3.71 billion in the same period last year. The earnings translated to $2.68 per share compared to $2.22 per share a year ago.

Morgan Stanley, MS

Revenue increased to $17.89 billion from $16.22 billion in the prior year. The wealth management division led the charge with $8.4 billion in net revenue. This marked an increase from $7.5 billion a year earlier.

For the full year, wealth management generated a record $31.8 billion in net revenue. Total client assets in the wealth and investment management business climbed to $9.3 trillion. The firm pulled in more than $350 billion in net new assets.

Investment Banking Delivers Strong Results

The investment banking segment showed impressive growth. Net revenue for the division jumped 47% to $2.41 billion from $1.64 billion a year earlier.

The increase came from stronger advisory fees. Completed M&A activity increased across all regions during the quarter.

Morgan Stanley bought back $1.5 billion of its stock during the quarter. For the full year, the bank repurchased $4.6 billion under its share repurchase program.

The firm also filed paperwork for spot Bitcoin and Solana ETFs. This move signals an expansion into crypto products that could boost fee revenue.

Morgan Stanley’s private equity arm took majority control of engineering firm Olsson. The deal shows the bank is expanding its alternative investment offerings.

Stock Performance and Analyst Views

Morgan Stanley shares gained 38% over the past 12 months. However, the stock fell nearly 3% this week as other major banks reported their results.

The stock opened at $180.77 on Thursday. The bank has a market cap of $287.30 billion.

Several analysts have updated their price targets recently. Jefferies Financial Group lifted its target from $186 to $212 with a buy rating. UBS Group raised its target from $156 to $165 with a neutral rating.

Three analysts rate the stock as a strong buy. Eight have given it a buy rating. Eight analysts issued a hold rating. The consensus rating is “Moderate Buy” with an average price target of $181.85.

CEO Edward Pick sold 100,000 shares in late October at an average price of $164.34. The transaction totaled $16.43 million. Following the sale, Pick directly owned 574,986 shares.

Institutional investors own 84.19% of Morgan Stanley stock. Several hedge funds adjusted their positions in the stock during the third quarter.

The bank reported a return on equity of 16.40% and a net margin of 13.85%. The company has a price-to-earnings ratio of 18.54 and a debt-to-equity ratio of 3.27.

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