The Morgan Stanley stock price declined sharply on Friday last week as investors reacted to the mixed bank earnings. The MS stock tumbled by about 3.58% and ended the week at $98.8, which was about 7% below this year’s high of $105.
Morgan Stanley earnings preview
Morgan Stanley is one of the biggest players in Wall Street. It has a total market capitalization of over $17 billion.
The company has a diversified revenue source. It operates in businesses like institutional securities, wealth management, and investment management. The firm offers its services to both institutional and retail investors. For example, through its recently-acquired eTrade, the company serves millions of retail customers.
Its biggest business is institutional securities, which generated net revenue of over $25 billion in 2020. It was followed by wealth management, which brought in $19 billion, and investment management that brought about $3.5 billion.
The Morgan Stanley stock price will be in the spotlight this week as the company is set to publish its quarterly results on Tuesday.
According to SeekingAlpha, analysts expect that the company’s revenue rose to $14.59 billion in the fourth quarter of 2021. That will be slightly lower than the $14.79 billion it collected in the third quarter of the year. But it will also be higher than the $13.5 billion it made in the same quarter in 2020.
In terms of profitability, analysts expect that Morgan Stanley’s earnings per share rose to $1.96 in the fourth quarter.
Still, analysts will be focusing mostly on the performance of key segments. The most important revenue will be the Fixed Income Commodities and Currencies (FICC).
Is MS a buy ahead of earnings?
Morgan Stanley stock price declined on Friday after Citi, Wells Fargo, and JP Morgan published mixed results. JP Morgan was surprised after its revenue missed analysts’ estimates in the fourth quarter.
The company also announced a sharp increase in costs in a bid to expand its competitive edge. Therefore, analysts expect that other banks will increase their spending.
JP Morgan was not the only big bank to disappoint. The Citi stock price tumbled by 1.25% after the company’s result showed that its restructuring costs were rising. The firm’s net income came in at $3.2 billion, which was about 25% lower than the previous quarter. Its FICC revenue missed analysts’ estimates as well.
Still, there are signs that Morgan Stanley will perform better than these banks. For one, it is not going through the changes that JP Morgan and Citigroup are going through.
The company is also set to benefit from the ongoing deal-making activities. This year alone, there have been a number of key deals. For example, GlaxoSmithKline rejected a 50 billion pound offer for its consumer business from Unilever. Also, companies have already raised over $100 billion in the debt market this year.
According to WeBull, the average target of the Morgan Stanley stock price is about $115, which is higher than the current $98.
Morgan Stanley stock price forecast
The daily chart shows that the Morgan Stanley stock price has been in a tight range recently. The stock has remained between the resistance and support levels at $105 and $94.89. It has also moved slightly below the 25-day and 50-day exponential moving averages. The consolidation is happening after the stock surged by over 280% from its lowest level in 2020. Therefore, there is a likelihood that the stock price will remain in this range after earnings.
