Shares of Morgan Stanley (MS) swung higher in pre-market trading after the bank reported a strong profit increase in the fourth quarter, driven by a surge in dealmaking. The bank reported earnings of $2.22 per diluted share in the fourth quarter, compared with $0.85 per diluted share in the same period a year back. This surpassed consensus estimates of $1.70 per share.
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What Drove the Growth in Morgan Stanley’s Revenues in Q4?
Furthermore, the bank’s Q4 revenues surged by 25.8% year-over-year to $16.2 billion, beating Street estimates of $15.03 billion. Additionally, MS clocked record FY24 revenues of $61.8 billion, with equity trading revenue climbing 22%, boosted by heightened activity in Asia and the Americas.
The bank’s investment banking division benefited from a flurry of mergers and acquisitions, spurred by a robust U.S. economy, interest rate cuts, and optimism over anticipated lighter regulation under incoming President Donald Trump.
In fact, Morgan Stanley’s Investment banking revenue surged 25% to $1.64 billion in the fourth quarter, mirroring similar results from rivals Goldman Sachs (GS) and JPMorgan (JPM).
Notably, the bank’s investment banking business is a part of its Institutional Securities business that comprised more than 40% of its total revenues.
Morgan Stanley’s CEO Comments on the Results
The bank’s Chairman and CEO Ted Pick termed FY24 as one of the bank’s “strongest years in the firm’s history.” Moreover, Pick highlighted that the bank generates long-term value for its shareholders by “executing against four pillars – strategy, culture, financial strength, and growth.”
Is MS Stock a Good Buy?
Analysts remain cautiously optimistic about MS stock, with a Moderate Buy consensus rating based on five Buys and eight Holds. Over the past year, MS has increased by more than 50%, and the average MS price target of $135.64 implies an upside potential of 3.9% from current levels. These analyst ratings are likely to change following MS’s results today.
