Banking & Finance

The Driving Force Behind Morgan Stanley's Record Quarter

When Morgan Stanley (NYSE: MS) released its second-quarter earnings report before the opening bell on Thursday, the investment house said that it had $1.96 in earnings per share (EPS) and $13.41 billion in revenue. The consensus estimates had called for EPS of $1.12 and $10.31 billion in revenue. In the same period of last year, the company said it had $1.23 in EPS on revenue of $10.24 billion.

For the latest quarter, book value per share was $49.57 and tangible book value per share was $43.68.

Management noted that the second quarter tested Morgan Stanley’s model and so far it has performed exceedingly well. In fact, this quarter reflects both record net revenues and net income, up 30% and 45%, respectively.

While more than 90% of its employees continue to work from home, the company has proven that its platform works and its trading revenues are through the roof.

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

  • Institutional Securities net revenues increased 56% year over year to $7.98 billion.
  • Wealth Management net revenues increased 6% to $4.68
  • Investment Management net revenues increased 6% to $886 million.

Perhaps the biggest win in this report was Sales and Trading revenues increasing 68% on strong client engagement as markets stabilized. Underwriting increased 64% as clients accessed the open capital markets to strengthen their balance sheets.

Morgan Stanley issued no guidance for the coming quarter. However, analysts are calling for $0.99 in EPS and $9.39 billion in revenue. For the full year, analysts expect EPS of $3.89 on $38.21 billion in revenue.

Morgan Stanley stock traded up about 3.5% on Thursday, at $53.16 in a 52-week range of $27.20 to $57.57. The consensus price target is $54.15.