Morgan Stanley (NYSE: $MS) is a multinational investment bank with offices in 41 countries and over 75,000 employees. Its clients include governments, corporations, individuals, and institutions.
Wall Street investors were bullish on Tuesday, April 16, following the release of its Q1 fiscal 2024 results, with the stock soaring over 2%.
Morgan Stanley’s Q1 Results
The bank reported a 16% jump in revenue compared to last year’s first quarter to $1.1 billion, while net income increased 13.33% to $3.4 billion or a diluted EPS of $2.202. Morgan Stanley also reported that clients’ assets had reached $7 trillion.
One of the highlights of the quarter was the rise in equity underwriting revenue to $430 million, more than double the $202 million reported in Q123.
During the quarter, the bank bought back $1 billion of its shares. It also declared a quarterly dividend of $0.85
CEO’s Comments
During an investor call, new CEO Ted Pick stated that he expects a resurgence in mergers and acquisitions. According to Pick, they “saw building momentum in investment banking, both in our M&A and underwriting pipelines across corporate and financial sponsor clients.” According to him, a multi-year M&A cycle was going to start now, lasting 3-5 years.
Pick added that the ongoing instability abroad, primarily due to the Ukrainian conflict and the Gaza conflict, coupled with the strengthening US economy, would present an opportunity for the bank.
He stated, “The fact that the U.S. economy continues to grow, that China is weaker, the parts of Europe are weaker highlights the fact that people want to get even more exposure to the US.”
Morgan Stanley Cuts Jobs in Asia-Pacific
According to a Wednesday, April 17 report by Reuters, Morgan Stanley plans to cut nearly 13% of its workforce in the Asia Pacific region. It becomes the latest multinational bank to scale back operations in the region as China’s economy slumps. The cuts will impact bankers in both Hong Kong and China.
MS Stock Performance
Following the release of the stellar Q1 fiscal 2024 results on Tuesday, April 16, MS shares saw a surge, rising 2.41% at the close of trading to $89.14 per share.
The rally continued on Wednesday, April 17, with the shares rising 2.19% to $91.09 as of 09:58 AM EDT. However, the shares are still below their Wednesday, April 10 closing price of $91.65 after the revelation of a Federal investigation last week caused the stock to slump around 5%.
Analysts Outlook
According to 16 Wall Street analysts, MS shares have an overall moderate buy rating. The analysts forecast a broad range for the stock in the next 12 months, with a high of $116 and a low of $87. Their average forecast of $98.60 is an 8.44% upside from the most recent price.
According to CFRA Research, the bank is on course to benefit from the recovery in investment banking and asset management. Kenneth Leon, a researcher at CFRA, stated that the bank could see a full-year EPS of $7.10, an upward revision from his previous forecast of $6.60.
In a note to clients, Leon stated, “Our investment thesis is underwriting and advisory (M&A) fees could benefit with CEOs renewing capital formation, and ALT firms (alternative investing firms) later this year needing to monetize from $1T+ investment funds to satisfy limited partners.”
Should You Buy Morgan Stanley Shares?
Morgan Stanley’s stellar results in the first quarter have helped to persuade skeptical results after the recent news of a federal investigation. Its CEO’s upbeat forecast of a strong US recovery has also helped to convince investors about the stock’s value proposition.
The stellar performance of its Investment Banking segment, coupled with the growth in clients’ assets to $7 trillion, positions the bank for steady growth in 2024 and beyond. Consequently, adding MS shares to your portfolio could pay off in the long run.
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