Morgan Stanley stock soared to an all-time high Wednesday after the company’s top and bottom lines beat in the third quarter in a show of strength across the bank. Sales for the three months ended Sept. 30 rose nearly 16% from a year earlier to $15.38 billion, beating estimates of $14.4 billion, according to estimates compiled by LSEG. LSEG said earnings per share (EPS) rose more than 36% year over year to $1.88, beating expectations of $1.58. MS YTD Mountain Morgan Stanley YTD Club Stock Morgan Stanley rose 7.5%. At one stage, it went even higher, breaking through the target price of $120. Given the stock’s strong performance, up more than 13% from its July high before the August market crash and 33% since August 5th, we set a new PT of $130 and a return Maintain wait rating 2. low. Conclusion This quarter was as clean as anyone could have hoped for. Morgan Stanley delivered a very strong quarter in terms of key performance indicators across the company, exceeding expectations in nearly every aspect of each business unit. Last quarter, when results were not as high as we had hoped, we reminded our members that patience is needed and that wealth management is a key focus area for investors who want to know what their banks’ permanent fees are. I told them that the situation is likely to improve. -based revenue streams continue to grow. That’s exactly what we saw in Wednesday morning’s release. The investment banking division, like its rivals like Wells Fargo, shined, with Friday’s comprehensive earnings report and comments shocking. Wells Fargo stock on Wednesday looked to extend its winning streak to nine consecutive sessions. We continue to believe that the improvements we are seeing in efficiency and disciplined execution at Morgan Stanley will further extend the tailwinds of a resilient U.S. economy and international stimulus activity. Explanation Return on tangible common equity (ROTCE) is an important metric in the evaluation of financial institutions, including determining the multiple of tangible book value of $43.76 per share. Morgan Stanley’s third-quarter ROTCE was 17.5%, well above expectations of 14.8%, according to estimates compiled by Bloomberg. Year-to-date, the bank has achieved ROTCE of 18.2%. The Common Equity Tier 1 (CET1) ratio, on the other hand, indicates a financial institution’s ability to return cash to shareholders through share buybacks and dividend payments. So we’re very happy to see that number reach 15.1%. That’s slightly lower than the 15.3% the Street was expecting, but not enough to worry about. Total customer assets across asset management and investment management now exceed $7.5 trillion, an increase of 1.4% compared to a year ago as management continues to execute on its mission to reach $10 trillion over the long term. nearly a trillion dollars more. The overall efficiency ratio, calculated by dividing total non-interest expenses by net revenue (lower is better, so lower is better), was significantly lower than expected, down 300 basis points compared to the same period last year. , the important thing is that we did not sacrifice costs such as: Continued investment in the business. On the conference call, CFO Sharon Yeshaya said that in addition to revenue growth, efficiency gains were the result of “disciplined prioritization of controllable spending.” Morgan Stanley repurchased $750 million worth of stock in the third quarter, totaling 8 million shares at an average price of $99.94 per share. Considering Wednesday’s share price, this looks like a pretty good move for shareholders. Given its CET1 ratio of 15.1%, Morgan Stanley has plenty of excess capital at its disposal to continue investing in growth and returning excess capital to shareholders. Morgan Stanley Reasons to own Morgan Stanley: We own Morgan Stanley for its growth in wealth management, which provides more permanent fee-based returns, as well as the recovery occurring in IPO and M&A activity. I’m doing it. We also believe that our excess capital will provide additional investment for growth, while supporting further shareholder returns through share buybacks and dividends. Competitor: Goldman Sachs Club Portfolio Weight: 3.5% Latest Purchase: October 18, 2023 Purchases Started: July 12, 2021 Segment Third Quarter Institutional Securities Posted by Strong International Performance The fourth quarter also showed a strong start, with management calling for an acceleration of activity after the end of the quarter. In line with the company’s assertions, CEO Ted Pick said in a conference call that “expanding equity markets and evolving interest rate policy are a favorable backdrop for our markets business.” Because of Morgan Stanley’s large size, it could benefit from “changing expectations regarding the size and timing of the Fed’s first rate cut,” changes in Bank of Japan monetary policy, and Chinese economic stimulus during the quarter. Ta. In the investment banking division, equity underwriting increased due to increased IPO activity, and bond underwriting increased significantly year-on-year. The Wealth Management division reported record revenues and record pre-tax profits. Net new assets for the quarter were approximately $64 billion, well above expectations of $53.5 billion, and year-to-date net new assets were $195 billion, an increase of 5% from the beginning of the year. “Year-to-date flows are on pace to outpace last year, supported by continued asset contributions from advisor-led brokerage accounts to fee-based accounts,” Yeshaya said. The CFO expects net interest income to be “slightly lower than third-quarter results, primarily due to lower interest rate expectations consistent with the forward curve.” This isn’t too big of a concern considering the Street is looking for about $1.73 billion in net interest income for the quarter. Pre-tax margin of 28.3%, a key focus for investors amid increased focus on fee-based performance, exceeded the consensus estimate of 26.8% and was very significantly compared to 26.8% in the previous quarter. It shows a continuous increase. Investment management was boosted by an increase in asset management and related fees associated with an increase in assets under management. During the conference call, Yeshaya emphasized the benefits of the upfront acquisition of Eaton Vance. (Jim Cramer’s Charitable Trust is Long MS, WFC. See here for a complete list of stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, trade before Jim makes trades. Receive alerts. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in his charitable trust’s portfolio. If Jim talks about a stock on CNBC TV, he will issue a trade alert and then wait 72 hours before executing the trade. The above investment club information is subject to our Terms of Use and Privacy Policy, along with our disclaimer. No fiduciary duties or obligations exist or arise from your receipt of information provided in connection with the Investment Club. No specific results or benefits are guaranteed.
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Morgan Stanley stock soared to an all-time high Wednesday after the company’s top and bottom lines beat in the third quarter, in a show of strength across the bank.
