Here's How The Buy Side Expects Morgan Stanley To Report Friday

Jan.16.14 | About: Morgan Stanley (MS)

Morgan Stanley (NYSE:MS) is set to release FQ4’2013 earnings before the opening bell on Friday, January 17. On Thursday we saw fellow asset management firms BlackRock (NYSE:BLK) and Charles Schwab (NYSE:SCHW) both beat the Wall Street consensus by a comfortable margin, the companies’ stocks were both up about 1% accordingly. Since Morgan Stanley last reported quarterly earnings the S&P 500 index was up over 4.5%, so as an asset manager the firm should be well positioned to take advantage of the robust stock market.

The information below is derived from data submitted to our platform by a set of Buy Side and Independent analyst contributors.

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The current Wall Street consensus expectation is for MS to report 43c EPS and $8.021B revenue while the current Estimize.com consensus from 24 Buy Side and Independent contributing analysts is 47c EPS and $8.092 revenue.

Morgan Stanley has beaten the Wall Street profit consensus 4 times over the past 6 quarters. Over the past year we have been more accurate than Wall Street 50% of the time in forecasting Morgan Stanley’s earnings and 75% in predicting revenue.

By tapping into a wider range of contributors including hedge-fund analysts, asset managers, independent research shops, students, and non professional investors we have created a data set that is up to 69.5% more accurate than Wall Street, but more importantly it does a better job of representing the market’s actual expectations.

The magnitude of the difference between Wall Street's and our consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case we are seeing an average differential between the consensuses.

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The distribution of estimates published by analysts on Estimize range from 43c to 54c EPS and $7.820B to $8.670B in revenues. This quarter we’re seeing a wider distribution of estimates compared to previous quarters. The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A wider distribution signaling the potential for greater volatility post earnings, a smaller vice versa.

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Over the past 4 months the Wall Street's and our EPS consensuses fall while the revenue expectations rose. The Wall Street EPS consensus dropped from 51c to 43c while our consensus shrunk from 49c to 47c. Wall Street revenue expectations increased from $7.996B to $8.021B while our consensus rose from $7.932B to $8.092B.

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The analyst with the highest estimate confidence rating this quarter is WallStreetBean who projects 48c EPS and $8.200B in revenue. In the Winter 2014 season, WallStreetBean is currently ranked as the 10th best analyst and is ranked 9th overall among over 3,400 contributing analysts. Estimate confidence ratings are calculated through algorithms developed by deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy. In this case the highest rated analyst is expecting MS to beat both Wall Street and us on profit and revenue.

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Throughout the past 2 years MS has had a mixed record against the Wall Street consensus. This quarter our contributing analysts are expecting Morgan Stanley to follow suit with fellow asset management firms BlackRock and Charles Schwab by beating the Street on both the top and bottom line.