Morgan Stanley is on deck to report lower earnings on Wednesday morning as the last of the U.S.’s largest banks to weigh in with results.
What to expect
Earnings: Analysts tracked by FactSet expect Morgan Stanley
MS,
to earn $1.28 a share, down from $1.47 a share in the year-ago quarter. At the start of the quarter, analysts had estimated third-quarter earnings of $1.58 a share for Morgan Stanley.
The consensus estimate from Estimize, which crowdsources estimates from hedge funds, academics and others, is $1.37 a share, based on 20 submissions.
Revenue: The FactSet consensus estimate for revenue is $13.22 billion, up slightly from $12.99 billion reported in the year-ago period.
Estimize is expected revenue to come to $13.327 billion.
Stock movement: Morgan Stanley’s stock price fell 4.4% in the third quarter in a choppy period for bank stocks overall. The stock is down just under 10% in the past month, compared to 1.9% drop by the S&P 500
SPX.
What else to watch for
As the last of the biggest six U.S. banks, Morgan Stanley’s trading figures are expected to be strong as they were with the firm’s rivals, amid robust equities and fixed income activity after a spike in Treasury yields in recent weeks and geopolitical uncertainty.
Those market-making expectations may already be baked into Morgan Stanley’s stock price, but the performance of its wealth-management unit is unclear.
While wealthy customers have fared well in the current economy, a clear picture of how Morgan Stanley is doing on this front will be one key component of the company’s quarterly update.
Morgan Stanley is also in the midst of a leadership transition, with James Gorman planning to step down by next May as chief executive. Three potential successors at the bank include Andy Saperstein, who heads up wealth management; Ted Pick, who runs capital markets; and Dan Simkowitz, head of investment management.
The bank may or may not comment on leadership transition, but it remains a focus for investors.
During the past month, 11 analysts cut their profit estimates for Morgan Stanley and only one increased their view.
UBS analyst Brennan Hawken on Oct. 10 downgraded Morgan Stanley to neutral from buy and cut his price target to $84 from $110.
“Despite its successful transformation into a wealth-management-focused firm with a solid, wire house peer leading growth profile, MS is confronted with obstacles such as deposit sorting/yield seeking, intense competition for talent, and a challenging revenue environment,” Hawken said.
The average rating among 26 analysts that cover Morgan Stanley is overweight.
Also read: Bank of America’s profit climbs 10%, boosted by interest rates and loans
This post was originally published on Market Watch
