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Morgan Stanley - Strong 2014 And Still A Reasonable Valuation
- Morgan Stanley's shift towards wealth management has reduced the risk profile and should ultimately lead to a higher valuation than many of its peers.
- The key transaction that changed the game for MS, was the Smith Barney acquisition from Citigroup.
- Morgan Stanley boasts a stellar balance sheet, and it is my expectation that the company should be increasingly able to buy back stock and enhance the dividend.
Morgan Stanley's Earnings Performance For 2014: On The Right Track?
- Morgan Stanley earned an 8.9 percent return on equity in 2014 doubling the performance of the previous year.
- Morgan Stanley, of the six largest bank holding companies, seems to be ahead of the others in transforming itself to be able to perform in the "new" economy.
- The changes that it has made is aimed at producing larger and more consistent returns.
Whisper Number Impact: What Will Morgan Stanley's Shares Do Post Earnings?WhisperNumber • Tue, Jan. 20
- The whisper number is $0.61, thirteen cents ahead of the analysts' estimate.
- Morgan Stanley has a 74% positive surprise history (having topped the whisper in 14 of the 19 earnings reports for which we have data).
- The overall average post earnings price move is 'negative' (beat the whisper number and see weakness, miss and see weakness) when the company reports earnings.
Can Morgan Stanley Continue Its Exceptional Performance?
- 2014 was a good year for Morgan Stanley.
- Sources close to the bank indicate that Morgan Stanley is planning to enter the Indian property market in 2015.
- Net income applicable to Morgan Stanley for the nine month period rose by an astounding 80% to $5.117 billion from $2.848 billion.
- The stock currently trades at $36.95 per share, trading near the 52-week high of $39.19 per share. This upward trajectory is likely to continue.
Morgan Stanley Seems To Be Pushing Forward Despite Aborting Sale Of Oil Unit To Rosneft
- The deal between Morgan Stanley and Rosneft met its dead end as US regulators failed to approve the deal over concerns regarding the Ukraine crisis.
- Sources close to the bank indicate that it is likely to actively participate in the Indian property market in 2015, as it cuts back on low yielding investments.
- Morgan Stanley was able to secure the $4.7 billion placement deal of Chinese company Peng An, leaving rivals behind and taking the top position in the Asian league tables.
- The company was able to report earnings of $0.77 per share in Q3 as revenues also grew by a staggering 54% and were reported at $8.7 billion.
- Stocks for the company seem attractive as they have gained nearly 22% in value year to date. Q4 results seem positive as of now.
Why Morgan Stanley Is The Best Stock In Its Industry Group
- The Capital Markets industry group has benefited from various industry tailwinds, such as the rising equity markets and the huge level of M&A activity.
- Morgan Stanley comes out as our industry group leader, combining an attractive valuation with price momentum and strong growth.
- We maintain a $48.73 price target on Morgan Stanley, representing a 27% premium on its current price.
Morgan Stanley - After A Solid Quarter, Only Buy On Dips
- Morgan Stanley posted excellent third quarter earnings last week.
- Both the investment banking and wealth management business performed very strong.
- Shares trade at a fair valuation, but note that current operating conditions are very favorable already.
- Unlike many other banks which suffer from lower interest rates, Morgan Stanley might actually benefit from them.
- Given the favorable point in the economic cycle and long term risks to the business model, I only buy on dips.
- MS beat consensus on the top and bottom lines.
- The strong earnings confirms our bullish thesis that MS is a value and growth play.
- We felt the bank was strongly positioned to top Q3 earnings and note there's more to come.
Morgan Stanley: Good Results Driven By Market StrengthDiesel • Oct. 20, 2014
- Morgan Stanley posted a profit increase of 89% compared to last year.
- The results were mostly driven by the strength of the equity market.
- In the short term, market weakness might hurt these results but the long-term story is intact.
- The company's valuation is attractive at 10 times earnings and 1 time book value.
- Morgan Stanley is scheduled to report Q3 2014 earnings before the opening bell on Friday, October 17th.
- Earnings Per Share Excluding Items: The current Street estimate is $0.54 (range $0.48 to $0.58).
- Revenues: The current Street estimate is for an increase of 0.8% y/y to $8.17 bln (range $7.74 bln to $8.51 bln).
Goldman Sachs Vs. Morgan Stanley: Which Is The Better Investment?
- Morgan Stanley has better EPS and revenue growth than Goldman.
- Goldman Sachs trades at a cheaper forward multiple than Morgan Stanley.
- Both are poised to benefit from continued strength in M&A activity and IPO demand.
Morgan Stanley: A Top Brokerage Getting Back Into Commodities
- While this is one of the top brokerages in the U.S. it’s now looking to get into the CNG business.
- It’s looking to use its Grandfather status to build and operate a nat gas facility.
- And why not? It’s in the business of building shareholder value and this looks to be an ideal time for nat gas investments.
Despite SureInvestment Debacle, Morgan Stanley Shines In 2014
- MS was charged with failing to scrutinize the operations of one of their accounts, SureInvestments, which was found to be involved in a U.K. Ponzi scheme.
- The fine was relatively small ($280,000), relative to the billions shelled out by peer institutions for dishonest practices.
- Relative to peers BAC and C, MS is looking strong; MS earnings results were positive; MS has beaten earnings estimates for the past seven quarters, consistently.
- We are optimistic that MS could be a strong selection moving forward, despite the SureInvestment embarrassment.
Adding Risk By Closing Morgan Stanley And Putting Profits To Work In Under Armour
- Morgan Stanley is a high growth financial company which pays a dividend, but I closed my position because I had a great profit in a short amount of time.
- Under Armour is a consumer goods stock which should thrive if the US consumer is on the rebound and as people try to get in better shape.
- By adding Under Armour to the growth portfolio I'm adding a bit more risk as the company doesn't pay a dividend.
Morgan Stanley: Real Value Hemmed In By Litigation Issues
- While the players of the industry witnessed a decline of 1% in their revenues in equity sales and trading, the company was able to register a CAGR of 7%.
- RWAs were down to $192 billion in the most recent quarter, mainly driven by decreased exposure to securitization and credit spread products.
- The wealth management segment continues to expand its revenue base on the back of increased scale and substantial asset growth, mainly achieved through successful integration with Citigroup's wealth management business.
- The wrongdoings of the institution have come back to haunt its bottom line once again in this quarter.
- The stock price is currently depressed due to the litigation hype.
Morgan Stanley Is At A Strong Support Level Right Now
- I sold out of Concho Resources because I had a quick gain in the stock and I was too "oily" in my growth portfolio.
- Morgan Stanley is a growth stock in the financial sector which also pays a dividend and is a value play.
- I believe Morgan Stanley has a strong floor of support at $33.
Morgan Stanley Jumps On Earnings, Building Foundation For Lasting Growth
- Q2 results for MS far exceeded the results of its main rivals BAC, JPM, and C; as well as Wall Street’s overall expectations.
- This stellar accomplishment is due mainly to the investment banking divisions and strength in its wealth management.
- MS has rare Wall Street management and is so far pretty clean from the huge scandals that have dragged down its peers over the past several years.
- We remain very positive on MS—viewing these earnings as a small boost on an overall, consistent climb in 2014.
Morgan Stanley - Gorman's Strategy Creates Stability And Value, And Is Already Paying OffThe Value Investor • Jul. 21, 2014
- Morgan Stanley posted strong second quarter results, even adjusting for DVA and tax benefits.
- CEO Gorman's strategy to focus on wealth and investment management creates visibility and high earnings.
- The freed up capital from exiting capital-intensive businesses is already being returned to investors, creating further appeal.
Yesterday, 4:48 PM
- The financial sector is off to a worse start to the year than even the energy names, with the XLF down 3.9% YTD vs. the XLE's 3.2% decline. The S&P 500 is roughly flat. The SPDR KBW Bank ETF (NYSEARCA:KBE) is off 7.5%, and the Regional Bank ETF (NYSEARCA:KRE) is lower by 6.9%.
- Q4 earnings results haven't been wonderful, but financial names had been savaged well before those reports started coming out. Instead there's a difficult regulatory regime that won't quit, and - for now - it's looking like "wait'll next year" for the rising interest rates that were supposed to drive profit margins higher. The 10-year/2-year spread - already pretty low at 150 basis points to start the year - has narrowed to 137 bps.
- A partial roll call of banks: Bank of America (NYSE:BAC) -12.1% YTD, Citigroup (NYSE:C) -10.1%, JPMorgan (NYSE:JPM) -9.4%, Morgan Stanley (NYSE:MS) -9.4%, Regions Financial (NYSE:RF) -14.7%, KeyCorp (NYSE:KEY) -4.5%, PNC Financial (NYSE:PNC) -5.4%, Bank of New York (NYSE:BK) -9.1%, Capital One (NYSE:COF) -6%, Discover (NYSE:DFS) -13.6%.
- Other spread-starved sector names: MetLife (NYSE:MET) -9.8%, AIG (NYSE:AIG) -8%, Prudential (NYSE:PRU) -10.8%, Schwab (NYSE:SCHW) -9.9%.
- Some of what's working in financials: Blackstone (NYSE:BX) +6.7%, E*Trade (NASDAQ:ETFC) +1.2%, WisdomTree (NASDAQ:WETF) +12.3%, Legg Mason +2.8%.
Tue, Jan. 20, 7:34 AM
- Excluding DVA, Q4 income from continuing operations of $903M or $0.40 per share vs. $336M and $0.15 one year ago.
- Institutional Securities net revenue excluding DVA of $3.2B vs. $3.7B one year ago, with pretax loss of $1.08B vs. pretax loss of $880M one year ago. Advisory revenues of $488M vs. $451M, thanks to boosted M&A activity. Equity sales and trading revenue of $1.6B vs. $1.5B. FICC revenue (excl.DVA) of $599M vs. $694M (-13.7%).
- Wealth Management revenue of $3.8B vs. $3.7B one year ago, and pretax income of $736M vs. $715M. Asset management fee revenue of $2.1B vs. $2B. Transactional revenues of $976M vs. $1.1B. Net interest income of $625M vs. $526M. Compensation expense of $2.3B vs. $2.1B. Total client assets more than $2T at year's end, with those in fee-based accounts of $785B up 13%. WM reps of $16,076 slips from $16,456.
- Investment Management revenue of $588M vs. $858M one year ago, with pretax loss of $6M vs. profit of $331M.
- Previously: Morgan Stanley misses by $0.08, misses on revenue (Jan. 20)
- MS -2% premarket
Tue, Jan. 20, 7:03 AM
Mon, Jan. 19, 5:30 PM
Thu, Jan. 15, 4:34 PM
- Morgan Stanley (NYSE:MS) promotes 151 employees to managing director, down from 153 in 2014, and against 144 two years ago. Of those promoted, 61% work in the U.S., 13% in Asia, and 26% in EMEA.
- About half of the new MDs work in investment banking, sales, or trading, a lower proportion than in the past as wealth management makes up a greater share of the bank's operations.
- Morgan reports its Q4 results before the bell on Tuesday.
Wed, Jan. 14, 3:22 PM
- One current co-head, Simon Greenshields - after 31 years with Morgan Stanley (MS -2.2%) - is exiting the bank, and the other, Colin Bryce, is looking to move into a senior advisory role, reports the WSJ. They'll be replaced with Nancy King - who most recently was in charge of oil - and natural gas specialist Peter Sherk.
- The changes come amid big change in commodities at Morgan Stanley and the rest of Wall Street, with most of the large investment banks, including Morgan, looking to scale back physical commodities business in favor of financial derivatives tied to the sector.
Wed, Jan. 14, 12:17 PM
- There could be downside risk to Goldman Sachs (GS -2.7%) and Morgan Stanley (MS -2.7%) numbers, warns Credit Suisse's Christian Bolu, noting FICC revenue at JPMorgan of $2.5B missed his estimate by about $200M.
- JPM management suggested performance was weaker in credit and securitized products, but forex and emerging markets saw strength, and Bolu notes Goldman's and Morgan Stanley's trading arms tend to be skewed more towards credit and less toward currencies and emerging markets.
- On the other hand, says the team at KBW, JPMorgan's stock trading results were good, which should be a positive for Morgan Stanley and Goldman, given their focus on equities. KBW suggests investors focus on investment banking results overall, rather than get too mired in the unit's various components.
Mon, Jan. 12, 2:51 PM
- "We now see less room for multiple expansion," says JMP's Devin Ryan on his downgrade of Morgan Stanley (MS -1.4%) to Market Perform from Market Outperform. The stock was the team's top pick in 2014, but Ryan notes gains of 25%, 65%, and 28% makes three straight years of significant outperformance.
- The stock's now trading at about 12x the team's 2015 estimates and 1.2x the forward book value estimate.
- Ryan does see opportunity elsewhere, though, particularly E*Trade (ETFC -1.5%) in the retail brokerage sector as earnings growth remains elevated, and Lazard (LAZ -1.2%) in the bulge bracket investment bank area as the M&A cycle still has room to run.
- 2015 is shaping up to be better than 2014 for alternative investment managers as well, says Ryan, naming Fortress Investment Group (FIG -2.2%) and KKR (KKR -2.1%) as top picks.
- Previously: JMP Securities: Time to ring the register on Morgan Stanley (Jan. 12)
Mon, Jan. 12, 8:06 AM| 2 Comments
Thu, Jan. 8, 12:24 PM
- Despite new regulations limiting its participation in such funds, Morgan Stanley (MS +1.3%) has raised about $1B for Morgan Stanley Credit Partners II, a private-equity type credit fund.
- The first fund closed in 2011 and was about the same size. The bank began raising money for this new fund 15 months ago.
- The strategy of both funds is the same: Making loans and buying the existing debt of companies in North America and Western Europe with EBITDA of more than $15M.
- Morgan is pushing ahead with private equity even as competitors have pulled back or exited completely thanks to the Volcker Rule. The bank is also raising a $4B global infrastructure fund, a $2.5B global real estate fund, and another global P-E fund of unknown size.
Mon, Jan. 5, 4:41 PM
- A deal for the sale of Montreal Gateway Terminals Partnership - a cargo container facility at the Port of Montreal - to a consortium led by Fiera Axium Infrastructure for more than $600M should be announced later this month, reports the WSJ.
- The Journal several months ago reported MGT had been put on the block.
- This facility has been profitable since Morgan Stanley (NYSE:MS) first acquired a stake in 2007, but others haven't fared as well, making financing for acquisitions tough to come by, and the buyer group is reportedly paying just 16-17x EBITDA vs. a 27x multiple for last year's sale of Australia's Newcastle Port.
Mon, Jan. 5, 11:13 AM
- A now former Morgan Stanley (MS -3.2%) employee stole partial client data on up to 10% of all Wealth Management clients, and certain account information of roughly 900 clients - including account names and numbers - was briefly posted on the Internet. The stolen data does not include passwords or social security numbers.
- The exposure was quickly detected by Morgan, and removed.
- Source: Press Release
Dec. 30, 2014, 11:11 AM
- Having scored tens of billions from other banks over bubble-era mortgages, the DOJ now has Morgan Stanley (MS -0.4%) in its sights, and unearthed documents/emails from an unrelated case perhaps show an even closer relationship between the bank and subprime king New Century than previously imagined.
- “Morgan Stanley is involved in almost every strategic decision that New Century makes in securitized products,” according to one internal Morgan Stanley report from 2004 that the bank surely doesn't want to see put in front of a jury.
- For its part, Morgan Stanley says it was competing for New Century loans with other banks and did not have any special leverage over the lender, and other documents indicate Morgan was stricter than some competitors in deciding which loans to accept.
- Source: NYT
Dec. 22, 2014, 9:15 AM
- Rosneft (OTC:RNFTF) says Morgan Stanley's (NYSE:MS) sale of its global oil merchanting business to Rosneft has been terminated due to likely regulatory refusal.
- Rosneft says the companies will continue to work together in other areas, while MS says it will seek other buyers for the unit.
- The oil merchanting unit includes MS's physical oil inventory and related purchase, sale and supply agreements, as well as oil terminal storage agreements and a 49% stake in a company which manages ~100 oil and chemical tankers.
Dec. 17, 2014, 2:24 PM
- Unlike previous stock sales by the U.K. government, Morgan Stanley (NYSE:MS) is charging a fee of just £1 to handle the affair.
- The bank has a six-month window to sell no more than 15% of the average volume of Lloyds, meaning somewhere in the area of about £3B of stock being sold by the end of June.
- Charity? Not exactly. There's something called order flow, and Morgan Stanley will be allowed to charge commissions to investors when the shares are sold. Morgan was chosen for the work because of the job it did leading the sale of 7.7B Citigroup shares by the U.S. in 2010.
- Previously: U.K. readies next sales of Lloyds stake (Dec. 17, 2014)
Dec. 17, 2014, 7:36 AM
- Jefferies yesterday posted a 73% plunge in fixed-income trading revenue for the quarter ended Nov. 30, and a 45% fall in equity-trading revenue. “You’re going to see weaker trading results because of what I’d call bad volatility,” says Charles Peabody, as firms cut back on stock and bond offerings.
- That Q4 trading revenue is going to be a weak one for the likes of JPM, C, BAC, GS, and MS shouldn't be a major surprise as Ciit's Mike Corbat, BofA's Brian Moynihan, and JPM's Marianne Lake said as much when presenting at a financial services conference earlier this month. But the weakness they described is nowhere near what was reported at Jefferies.
- Alongside the weak trading results, Jefferies is also looking to get rid of Bache - its commodities-trading business. "The fact that they are throwing in the towel on this business just a few years in would suggest that maybe that opportunity is not nearly as robust as they thought it would be,” says UBS's Brennan Hawken.
- Previously: Jefferies posts loss, mulling sale of Bache unit (Dec. 16, 2014)
MS vs. ETF Alternatives
Morgan Stanley is a financial services firm that, through its subsidiaries and affiliates, provides its products and services to a diversified group of clients and customers, including corporations, governments, financial institutions and individuals.
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