Banking & Finance

Will Trading Revenues Play a Big Role in Morgan Stanley's Q4 Report?

Morgan Stanley (NYSE: MS) is set to release its most recent quarterly results before the opening bell on Thursday. The consensus estimates are calling for $1.11 in earnings per share (EPS) and $9.63 billion in revenue. The fourth quarter of last year reportedly had $1.17 in EPS and $9.87 billion in revenue.

As we’ve seen some of the major banks report this week, investments and trading revenues have played a big role in the results. JPMorgan even found the trading magic again. While other banks saw notable increases their reports, Goldman Sachs and Wells Fargo were held back by litigious issues.

In the most recent quarter, Morgan Stanley management said that it delivered strong quarterly earnings despite the typical summer slowdown and volatile markets. Firmwide revenues were over $10 billion for the third consecutive quarter, and the investment house produced a return on equity within its target range.

For the third quarter, book value per share was $45.49 and tangible book value per share was $39.73.

In terms of its business segments at that time, Morgan Stanley reported as follows:

  • Investment Banking revenues increased 4% year over year to $1.64 billion.
  • Trading revenue decreased 5% to $2.61 billion.
  • Investments revenue decreased by 36% to $87 million.
  • Commissions and Fees increased by 6% to $990 million.
  • Asset Management revenue increased 3.4% to $3.36 billion.
  • Other revenue decreased 56% to $131 million.

Overall, Morgan Stanley stock has performed more or less in line with the broad markets, with shares up 24% in the past 52 weeks. They are 25% higher in the past quarter alone.

Ahead of the report, a few analysts weighed in on stock:

  • JMP Securities has a Market Perform rating.
  • D.A. Davidson rates it as Buy with a $62 price target.
  • Deutsche Bank has a Hold rating.
  • BNP Paribas has a Buy rating and a $59 price target.
  • Odeon Capital Group has a Hold rating.

Shares of Morgan Stanley traded at $52.85 on Wednesday, in a 52-week range of $38.76 to $53.25. The consensus price target is $57.35.