Core Viewpoint - Momentum investing focuses on following a stock's recent price trends, aiming to buy high and sell higher, with the expectation that established trends will continue [1] Company Overview: Morgan Stanley (MS) - Morgan Stanley currently holds a Momentum Style Score of B, indicating a favorable momentum characteristic [2] - The company has a Zacks Rank of 1 (Strong Buy), suggesting strong potential for outperformance in the market [3] Performance Metrics - Over the past week, Morgan Stanley's shares increased by 1.12%, outperforming the Zacks Financial - Investment Bank industry, which rose by 0.46% [5] - In the last month, Morgan Stanley's stock price changed by 13.39%, compared to the industry's 9.68% [5] - Over the past quarter, shares rose by 4.42%, and over the last year, they increased by 62.98%, while the S&P 500 only moved 1.24% and 22.19%, respectively [6] Trading Volume - The average 20-day trading volume for Morgan Stanley is 6,983,656 shares, which serves as a bullish indicator when combined with rising stock prices [7] Earnings Outlook - In the past two months, 8 earnings estimates for Morgan Stanley have been revised upwards, with no downward revisions, leading to an increase in the consensus estimate from $7.89 to $8.56 [9] - For the next fiscal year, 5 estimates have also moved upwards, with no downward revisions during the same period [9] Conclusion - Considering the positive momentum indicators and earnings outlook, Morgan Stanley is positioned as a 1 (Strong Buy) stock with a Momentum Score of B, making it a strong candidate for near-term investment [11]

Core Viewpoint - Morgan Stanley's shares have increased over 5.5% following the release of its Q4 and full-year 2024 results, reaching an all-time high of $139.04, driven by strong deal-making and trading activities [1][3]. Group 1: Quarterly Performance - In Q4, Morgan Stanley's investment banking (IB) fees rose 26.6% year-over-year to $1.79 billion, with equity underwriting fees increasing by 102.2% and advisory fees surging 47.1% [3]. - Trading revenues also saw significant growth, with equity trading revenues up 51% to $3.33 billion and fixed-income trading income growing 34.7% to $2 billion [4]. Group 2: Future Outlook - The company is optimistic about its IB business in 2024, citing a healthy M&A pipeline, which is reportedly the highest in seven years [4][7]. - The new administration under President Trump is expected to adopt a more lenient approach to deal-making, which could benefit Morgan Stanley's operations [6][7]. Group 3: Strategic Initiatives - Morgan Stanley has reduced its reliance on capital markets by expanding its wealth and asset management operations, with these segments contributing over 55% to net revenues in 2024, up from 26% in 2010 [9][10]. - The Investment Management division recorded $82.5 billion in total net flows in 2024, with assets under management reaching $1.6 trillion, a 14% increase year-over-year [11]. Group 4: Valuation and Analyst Sentiment - Morgan Stanley's stock is currently trading at a forward P/E of 16.07, above the industry average of 14.40, indicating a stretched valuation [16]. - Despite the premium valuation, analysts have raised their earnings estimates for 2025 and 2026, reflecting positive sentiment and expected growth of 13.3% in the long term [19][22].

Group 1: Momentum Investing Overview - Momentum investing involves following a stock's recent trend, with the aim of buying high and selling higher, capitalizing on established price movements [1] - The Zacks Momentum Style Score helps investors identify stocks with momentum by focusing on key metrics [2] Group 2: Morgan Stanley's Performance - Morgan Stanley (MS) currently holds a Momentum Style Score of A, indicating strong momentum potential [3] - MS has a Zacks Rank of 2 (Buy), suggesting it is positioned for outperformance in the market [4] - Over the past week, MS shares increased by 11.68%, outperforming the Zacks Financial - Investment Bank industry, which rose by 7.51% [6] - In the last quarter, MS shares rose by 17.96%, and over the past year, they gained 61.55%, significantly outperforming the S&P 500's increases of 2.93% and 28.08% respectively [7] Group 3: Trading Volume and Earnings Outlook - MS's average 20-day trading volume is 5,487,322 shares, indicating strong interest and potential bullish momentum [8] - In the past two months, 6 earnings estimates for MS have been revised upwards, raising the consensus estimate from $7.88 to $8.06 [10] - For the next fiscal year, 4 estimates have increased while 1 has decreased, reflecting positive earnings outlook [10] Group 4: Conclusion - Given its strong performance metrics and positive earnings revisions, MS is recommended as a solid momentum pick for investors [12]

Company Overview - Morgan Stanley (MS) is currently positioned as an intriguing investment choice due to solid earnings estimate revisions and a favorable industry ranking [1][3]. - The firm has seen a rise in earnings estimates, with current quarter estimates increasing from $1.55 to $1.65 per share, and current year estimates rising from $7.33 to $7.42 per share [4]. Industry Analysis - The Financial - Investment Bank sector has a Zacks Industry Rank of 11 out of over 250 industries, indicating strong positioning compared to other segments [2]. - The positive trends in the industry suggest that a rising tide may benefit all companies within this sector, including Morgan Stanley [2]. Investment Potential - Morgan Stanley's recent earnings estimate revisions indicate a more bullish outlook from analysts for both short and long-term prospects [3]. - The company's Zacks Rank of 2 (Buy) further emphasizes its solid position within the industry, making it a compelling option for investors [4][5].

Investment Rating - The report does not explicitly state an investment rating for Morgan Stanley (MS US) [1][2][3][4] Core Views - Morgan Stanley's Q4 2024 revenue and profit exceeded expectations, with significant outperformance across key business segments [2][3][4] - The company's deposit and loan growth also surpassed market expectations, indicating strong financial performance [2][3][4] Business Performance - Revenue growth was +25.8% YoY, significantly higher than the Bloomberg consensus forecast of +16.4% [3][4] - Net interest income increased by +34.5% YoY, outperforming the expected +5.2% [3][4] - Non-interest income grew by +24.3% YoY, above the consensus forecast of +21.8% [3][4] - Efficiency ratio improved by -15.0 percentage points to 69.0%, better than the expected 74.7% [3][4] - Net profit attributable to common shareholders surged by +157.7% YoY, far exceeding the forecast of +97.0% [3][4] Segment Performance - Institutional Securities revenue grew by +47.1% YoY, outperforming the expected +26.4% [3][4] - Wealth Management revenue increased by +12.5% YoY, above the consensus forecast of +10.2% [3][4] - Investment Management revenue rose by +12.2% YoY, surpassing the expected +6.3% [3][4] Balance Sheet Metrics - Total loans grew by +8.8% YoY, higher than the expected +3.6% [3][4] - Total deposits increased by +6.9% YoY, above the consensus forecast of +3.8% [3][4] - Credit loss provisions were $115 million, higher than the expected $74 million [3][4] Capital and Profitability Metrics - CET1 ratio increased by +0.7 percentage points to 15.9%, above the expected 15.1% [3][4] - ROTCE (Return on Tangible Common Equity) improved by +11.8 percentage points to 20.2%, significantly higher than the expected 15.2% [3][4] - ROE (Return on Equity) increased by +9.0 percentage points to 15.20%, above the consensus forecast of 11.44% [3][4] Summary - Morgan Stanley's Q4 2024 performance was strong across all key metrics, with revenue, profit, and balance sheet growth exceeding market expectations [2][3][4]

Financial Data and Key Metrics Changes - The firm reported total revenues of $61.8 billion for 2024, with fourth-quarter revenues reaching a record $16.2 billion [39] - Return on Tangible Common Equity (ROTCE) for the full year was 18.8%, while fourth-quarter ROTCE was 20.2% [39] - Earnings per share (EPS) for the full year was $7.95, with fourth-quarter EPS at $2.22 [39] - The efficiency ratio for the full year improved to 71.1%, indicating better revenue growth management [40] Business Line Data and Key Metrics Changes - Institutional Securities generated full-year revenues of $28.1 billion, with fourth-quarter revenues of $7.3 billion [43] - Wealth Management achieved record revenues of $28.4 billion for the year, with a pre-tax profit of $7.7 billion and a margin of 27.2% [57] - Investment Management reported annual revenues of $5.9 billion, with quarterly revenues of $1.6 billion [68] Market Data and Key Metrics Changes - Each region in Institutional Securities grew revenues by approximately 20% in 2024, reflecting a strong global performance [22] - Wealth Management added net new assets of over $250 billion in each of the past two years, aiming for over $10 trillion in total client assets [25] - The firm ended 2024 with total client assets at $7.9 trillion [36] Company Strategy and Development Direction - The company focuses on an integrated firm strategy supported by four pillars: strategy, culture, financial strength, and growth [11] - Investments will continue in talent, technology, and infrastructure to support growth across all business segments [18] - The firm aims to enhance its wealth management and investment management platforms through strategic partnerships and technology investments [67][70] Management's Comments on Operating Environment and Future Outlook - Management highlighted the end of financial repression and geopolitical uncertainty as key themes impacting the business environment [6] - The firm is well-positioned for growth, with a strong capital position and healthy pipelines across all business segments [74] - There is optimism regarding M&A activity, with the strongest pipeline in years, driven by improving CEO and boardroom confidence [48][132] Other Important Information - The firm accreted over $5.5 billion of Common Equity Tier 1 (CET1) capital in 2024, ending the year with a CET1 ratio of 15.9% [73] - The quarterly tax rate was 24.1%, with expectations for a similar rate in 2025 [73] Q&A Session Summary Question: Discussion on trading environment and durable gains - Management emphasized the importance of a well-organized approach to client relationships and the integrated investment bank model to achieve durable gains in trading [81][84] Question: Status of AML and BSA compliance in wealth management - Management confirmed ongoing investments in processes and systems to ensure robust compliance infrastructure, which supports growth objectives [95][96] Question: Integration status of the bank and growth opportunities - Management acknowledged that integration is ongoing, with significant potential for deposit growth from wealth management clients [99][100] Question: Insights on loan growth trends - Management noted a decline in paydowns and an increase in the use of lines, indicating a positive shift in loan growth dynamics [116][119] Question: Expectations for cash trends and market investments - Management expressed optimism about the transition of client cash from sweep accounts into market-oriented products, reflecting a more transactional approach [123][128] Question: Backlog status in investment banking - Management reported the highest M&A pipeline in seven years, indicating strong demand for corporate finance activities [132][138]

Core Insights - Morgan Stanley reported a revenue of $16.22 billion for the quarter ended December 2024, marking a 25.8% increase year-over-year and exceeding the Zacks Consensus Estimate of $14.88 billion by 9.05% [1] - The company's EPS was $2.22, significantly higher than the $1.13 reported in the same quarter last year, and surpassed the consensus estimate of $1.65 by 34.55% [1] Financial Performance Metrics - Book value per common share was $58.98, exceeding the five-analyst average estimate of $58.18 [4] - Return on average common equity stood at 15.2%, compared to the estimated 11.1% by four analysts [4] - Total client assets in Wealth Management reached $6,194 billion, surpassing the estimated $5,764.14 billion [4] - Total assets under management were $1,666 billion, exceeding the two-analyst average estimate of $1,541.39 billion [4] Revenue Breakdown - Investment banking revenues were reported at $1.79 billion, matching the average estimate and reflecting a 26.6% year-over-year increase [4] - Commissions and fees generated $1.39 billion, exceeding the estimated $1.22 billion and representing a 25.2% increase from the previous year [4] - Net revenues from Investment Management were $1.64 billion, surpassing the estimated $1.51 billion and showing a 12.2% year-over-year growth [4] - Institutional Securities net revenues reached $7.27 billion, exceeding the estimated $6.18 billion and reflecting a 47.1% increase year-over-year [4] - Net interest revenue was $2.55 billion, above the estimated $2.10 billion, marking a 34.5% increase from the prior year [4] - Other revenues were reported at $438 million, below the estimated $501.05 million, indicating a decline [4] - Asset management revenues totaled $6.06 billion, exceeding the estimated $5.77 billion and representing a 20.2% year-over-year increase [4] - Total non-interest revenues were $13.67 billion, surpassing the average estimate of $12.70 billion and reflecting a 24.3% increase year-over-year [4] Stock Performance - Morgan Stanley's shares returned +7.9% over the past month, outperforming the Zacks S&P 500 composite, which saw a -1.6% change [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [3]

Financial Performance - Morgan Stanley reported quarterly earnings of $2.22 per share, exceeding the Zacks Consensus Estimate of $1.65 per share, and up from $1.13 per share a year ago, representing an earnings surprise of 34.55% [1] - The company posted revenues of $16.22 billion for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 9.05%, compared to year-ago revenues of $12.9 billion [2] - Over the last four quarters, Morgan Stanley has consistently surpassed consensus EPS estimates and revenue estimates [2] Stock Performance - Morgan Stanley shares have increased approximately 3.8% since the beginning of the year, outperforming the S&P 500's gain of 1.2% [3] - The current consensus EPS estimate for the upcoming quarter is $2.18 on revenues of $16.26 billion, and for the current fiscal year, it is $8.04 on revenues of $63.52 billion [7] Industry Outlook - The Financial - Investment Bank industry, to which Morgan Stanley belongs, is currently ranked in the top 6% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that the stock is expected to outperform the market in the near future [5][6]

Financial Performance - Net revenues for Q4 2024 reached $16,223 million, a 5% increase from Q3 2024 and a 26% increase from Q4 2023[3] - Net income applicable to Morgan Stanley for Q4 2024 was $3,714 million, a 16% increase from Q3 2024 and 145% increase from Q4 2023[3] - Earnings per diluted share for Q4 2024 were $2.22, an 18% increase from Q3 2024 and 161% increase from Q4 2023[6] - Consolidated net revenues for Q4 2024 were $16,223 million, a 5% increase from $15,383 million in Q3 2024 and a 26% increase from $12,896 million in Q4 2023[8] - Net income applicable to Morgan Stanley for Q4 2024 was $1,891 million, a 32% increase from $1,436 million in Q3 2024 and a 93% increase from $304 million in Q4 2023[12] - The pre-tax margin for Wealth Management was 27% in Q4 2024, consistent with Q4 2023[14] - Total non-interest expenses for Q4 2024 were $11,202 million, compared to $11,083 million in Q3 2024 and $10,797 million in Q4 2023, with total non-interest expenses year-to-date at $43,901 million[36] Revenue Breakdown - Institutional Securities net revenues were $7,267 million, up 7% from Q3 2024 and 47% from Q4 2023[3] - Wealth Management net revenues increased to $7,478 million, a 3% rise from Q3 2024 and 13% from Q4 2023[3] - Investment Management net revenues rose to $1,643 million, reflecting a 13% increase from Q3 2024 and 12% from Q4 2023[3] - Investment banking revenues for Q4 2024 reached $1,641 million, a 12% increase from $1,463 million in Q3 2024 and a 25% increase from $1,318 million in Q4 2023[12] - Wealth Management net revenues for Q4 2024 were $7,478 million, a 3% increase from Q3 2024 and a 13% increase from Q4 2023[14] - Adjusted net revenues (non-GAAP) for Q4 2024 were $7,504 million, compared to $6,403 million in Q4 2023, reflecting a 17.3% increase[42] Asset and Capital Management - The firm’s total assets as of December 31, 2024, were reported at $1,000 billion, reflecting a strategic focus on asset growth and management[3] - Total assets decreased by 3% from $1,258,027 million in Q3 2024 to $1,215,071 million in Q4 2024, but increased by 2% compared to $1,193,693 million in Q4 2023[8] - The Common Equity Tier 1 capital ratio improved to 15.9% in Q4 2024 from 15.1% in Q3 2024 and 15.2% in Q4 2023[10] - The Tier 1 capital ratio was 17.9% in Q4 2024, up from 17.1% in Q3 2024 and consistent with 17.1% in Q4 2023[10] - The allowance for credit losses (ACL) for loans and lending commitments at the end of Q4 2024 was $1,722 million, down from $1,723 million at the end of Q3 2024[46] Loans and Deposits - Loans increased by 3% from $239,760 million in Q3 2024 to $246,814 million in Q4 2024, and by 9% compared to $226,828 million in Q4 2023[8] - Deposits rose by 3% from $363,722 million in Q3 2024 to $376,007 million in Q4 2024, and by 7% compared to $351,804 million in Q4 2023[8] - Consolidated Loans totaled $422.8 billion, a 3% increase from $409.6 billion in the previous quarter and a 12% increase from $376.3 billion year-over-year[23] - Wealth Management Loans increased to $159.5 billion, up 3% from $155.3 billion in the previous quarter and up 9% from $146.5 billion year-over-year[23] Client Assets and Flows - Total client assets in Wealth Management reached $6,194 billion, reflecting a 4% increase from Q3 2024 and a 21% increase from Q4 2023[17] - Net new assets for Q4 2024 were $56.5 billion, down 12% from Q3 2024 but up 19% from Q4 2023[17] - Total Net Flows reached $71.1 billion, a significant increase from $16.6 billion in the previous quarter, while year-over-year flows improved from $7.5 billion[21] - Long-Term Net Flows were $4.3 billion, down 41% from $7.3 billion in the previous quarter, and down from $18.0 billion year-over-year[21] Expenses and Compensation - Compensation expenses for Q4 2024 were $6,197 million, a decrease from $6,457 million in Q3 2024 and an increase from $5,597 million in Q4 2023[4] - Compensation and benefits for Q4 2024 amounted to $6,289 million, a decrease from $6,733 million in Q3 2024 and an increase from $5,951 million in Q4 2023[36] - Total non-interest expenses for Wealth Management were $5,388 million in Q4 2024, a 4% increase from Q3 2024 and a 3% increase from Q4 2023[14] Performance Metrics - Return on average common equity improved to 15.2% in Q4 2024, compared to 13.1% in Q3 2024 and 6.2% in Q4 2023[6] - The return on average common equity for Q4 2024 was 16%, up from 12% in Q3 2024 and 2% in Q4 2023[12] - Return on Average Common Equity for Wealth Management was 20% for the year ended December 31, 2024, compared to 17% for the previous year[14] Risk and Regulatory Compliance - The firm continues to evaluate its Required Capital framework in light of evolving regulatory requirements to ensure adequate capital is maintained[30] - The average liquidity resources for the three months ended December 31, 2024, were actively managed considering various components including unsecured debt maturity profile and regulatory requirements[30] - The firm’s risk-based capital ratios are computed under standardized and advanced approaches for calculating credit risk and market risk risk-weighted assets[30]

Core Insights - Analysts expect Morgan Stanley (MS) to report quarterly earnings of $1.62 per share, reflecting a year-over-year increase of 43.4% [1] - Revenue projections stand at $14.8 billion, indicating a 14.7% increase from the previous year [1] - The consensus EPS estimate has been revised upward by 1.1% over the past 30 days, showing analysts' reappraisal of initial projections [1] Revenue Estimates - The consensus estimate for 'Revenues- Investment banking' is $1.72 billion, representing a year-over-year change of +21.5% [4] - 'Net revenues- Investment Management' are projected to reach $1.52 billion, indicating a +3.8% change from the year-ago quarter [4] - 'Revenues- Asset management' are estimated at $5.77 billion, reflecting a +14.6% year-over-year change [4] Non-Interest Revenues and Book Value - Analysts forecast 'Total non-interest revenues' to be $12.58 billion, suggesting a +14.4% year-over-year change [5] - The 'Book value per common share' is expected to be $58.14, up from $55.50 in the same quarter last year [5] Return on Equity and Client Assets - The consensus for 'Return on average common equity' is 10.7%, compared to 6.2% reported in the same quarter last year [6] - 'Wealth Management - Total client assets' is projected to reach $5,779.08 billion, up from $5,129 billion in the previous year [6] Assets Under Management - 'Total assets under management' is expected to be $1,545.39 billion, compared to $1,459 billion in the same quarter last year [7] - 'Assets under management - Liquidity and Overlay Services' is estimated at $490.87 billion, slightly up from $485 billion year-over-year [7] - 'Assets under management - Fixed income' is projected to reach $181.04 billion, compared to $171 billion in the previous year [8] Market Performance - Over the past month, Morgan Stanley shares have recorded a return of -3.1%, compared to the Zacks S&P 500 composite's -2.2% change [9]