Morgan Stanley Stock Soars After Strong Earnings Report

Morgan Stanley hit a new 52-week high after beating Q4 earnings estimates.

Earnings week kicked off with each of the major banks reporting their end of the year earnings and revenue. JP Morgan Chase, Citigroup, Goldman Sachs, and Bank of America all reported their quarterly earnings earlier in the week.

On Thursday, it was Morgan Stanley’s turn and the firm didn’t disappoint. Shares of Morgan Stanley were up by more than 7% after the firm beat its fourth-quarter estimates. 

The firm profits and revenue came in higher than expected, and management revealed ambitious plans for 2020. Let’s look at an overview of how Morgan Stanley did during the fourth quarter, and what we can expect in 2020 and beyond.

An overview of Morgan Stanley’s Q4 results

During the fourth quarter, Morgan’s Stanley’s revenue grew 27% to reach $10.86 billion. This exceeded analyst expectations of $9.72 billion in revenue. The firm’s profits were up as well and reached $1.30 per share, beating expectations of 99 cents per share. 

In fact, Morgan Stanley exceeded Wall Street’s expectations across nearly every leg of its business. The firm’s financial securities division grew by 32%, and its wealth management leg grew by 11%.

But it was Morgan Stanley’s investment management division that really blew expectations out of the water. The division grew nearly 100% from a year earlier to reach $1.36 billion in revenue. In comparison, Wall Street was expecting this division to reach $783.2 million in revenue. 

And management expects the momentum to continue well into 2020. The firm outlined aggressive financial goals for the next two years. This included boosting the pretax margin in its wealth management business by up to 30%. And Morgan Stanley plans to lower its efficiency ratio to between 70%-72%.

What’s next for the financial firm?

Overall, it has been a good week for the banking industry. JP Morgan, Bank of America, and Citigroup all beat analyst expectations as well. But Goldman Sachs and Wells Fargo both took a hit due to ongoing legal expenses. 

Overall, Morgan Stanley is considered a moderate buy on Wall Street. The bank has had a strong year and the stock is up 28% from a year earlier.