Does This Feel Like a Record Quarter for Morgan Stanley?

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Morgan Stanley (NYSE: MS) released its first-quarter earnings report before the markets opened on Wednesday. The investment bank said that it had $1.45 in earnings per share (EPS) on $11.1 billion in revenue, which compares with consensus estimates from Thomson Reuters of $1.25 in EPS on revenue of $10.32 billion. The same period of last year reportedly had EPS of $1.00 and $9.74 billion in revenue.

During the quarter, Morgan Stanley reported a record profit, helped by a lower tax bill and a boost in revenue from last quarter’s volatile markets.

In terms of its segments, the firm reported its first-quarter results as follows:

  • Institutional Securities net revenues were $6.1 billion reflecting strength across our sales and trading franchise; Investment Banking Ranked #1 in Global Announced and Completed M&A and Global Equity.
  • Wealth Management reported net revenues of $4.4 billion, record pre-tax income of $1.2 billion and a pre-tax margin of 26.5%; Strong fee-based asset flows of $18.2 billion for the quarter.
  • Investment Management net revenues were $718 million reflecting higher management fees; Continued positive long-term net flows in the quarter.

Book value and tangible book value per common share were $39.19 and $34.04, respectively. Also Morgan Stanley’s Common Equity Tier 1 and Tier 1 risk-based capital ratios under the fully phased-in Standardized Approach were 15.6% and 17.8%, respectively.

The bank did not issue any guidance in the report, but consensus estimates call for $1.13 in EPS on $10.08 billion in revenue for the second quarter. For the 2018 full year, the consensus estimates are $4.52 in EPS and $39.89 billion in revenue.

James P. Gorman, board chair and chief executive, commented:

We delivered very strong results this quarter, with record revenues and net income – and an ROE above our target range. Each of our businesses performed well, with significant client engagement across our global franchise, and Sales and Trading a particular highlight in a more active environment.

Shares of Morgan Stanley closed Tuesday at $53.24, with a consensus analyst price target of $61.17 and a 52-week range of $40.43 to $59.38. Following the announcement, the stock was up 2.5% at $54.58 in early trading indications Wednesday.

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