Morgan Stanley-Surge in IB Activities & Solid Trading to Support MS' Q4 Earnings

Core Viewpoint - Morgan Stanley's trading business is expected to perform well in Q4 2024, driven by increased client activity and market volatility, which will likely support its quarterly results to be announced on January 16 [1][2]. Trading Revenues - The Zacks Consensus Estimate for equity trading revenues is $2.38 billion, reflecting an 8.2% increase year-over-year, while fixed-income trading revenues are estimated at$ 1.78 billion, indicating a 24% growth [3]. - The company's own estimates for Q4 equity trading revenues and fixed-income trading revenues are $2.78 billion and$ 1.93 billion, respectively [3]. Investment Banking Income - Global mergers and acquisitions (M&As) showed significant improvement in Q4 2024, with robust deal value and volume, supported by strong financial performance and interest rate cuts [4]. - The Zacks Consensus Estimate for advisory fees is $593.2 million, suggesting a 15.5% decline from last year, while the company's estimate is$ 613.1 million [5]. - The IPO market is showing cautious optimism, with increased activity in follow-up equity issuances and decent bond issuance volume, leading to expected growth in underwriting fees [6]. - The consensus estimate for fixed-income underwriting fees is $515.2 million (31.8% increase), and for equity underwriting fees, it is$ 360.6 million (60.3% increase), with total underwriting fees estimated at $875.8 million (42.2% rise) [7]. - Total Investment Banking income is expected to rise significantly, with the Zacks Consensus Estimate at$ 1.62 billion (22.8% increase) [8]. Net Interest Income - The Federal Reserve's interest rate cuts are anticipated to support Morgan Stanley's Net Interest Income (NII) growth, with the Zacks Consensus Estimate for NII at $2.09 billion (10.1% increase) [9][10]. Expenses - Overall costs are expected to be elevated due to investments in franchises, with total non-interest expenses estimated at$ 11.04 billion (2.2% year-over-year increase) [11]. Earnings Estimates - The Zacks Consensus Estimate for earnings per share has been revised to $1.60, indicating a 41.6% rise from the previous year, with sales estimated at$ 14.71 billion (14.1% increase) [14]. Earnings Prediction - The likelihood of Morgan Stanley beating the Zacks Consensus Estimate for earnings is high, supported by a positive Earnings ESP of +1.79% and a Zacks Rank of 3 [12][13].