Morgan Stanley (MS) Up 11.6% Since Last Earnings Report: Can It Continue?

Core Viewpoint - Morgan Stanley's Q1 2024 earnings report showed strong performance, with earnings per share of $2.02, exceeding estimates and reflecting a year-over-year increase. The company experienced growth in its Institutional Securities division despite challenges in advisory fees and net interest income [2][3]. Financial Performance - Earnings per share for Q1 2024 were $2.02, surpassing the Zacks Consensus Estimate of $1.69 and up from $1.70 in the prior-year quarter [2]. - Total net revenues reached $15.14 billion, a 4% increase from the previous year, and exceeded the Zacks Consensus Estimate of $14.47 billion [4]. - Net income applicable to common shareholders was $3.27 billion, a 15% increase from the year-ago quarter, compared to an estimate of $2.69 billion [3]. Revenue Breakdown - Institutional Securities division reported net revenues of $7.02 billion, up 3% year over year, driven by increased underwriting and equity trading revenues [5]. - Wealth Management segment's net revenues were $6.88 billion, also up 5%, supported by higher asset management and transactional revenues [5]. - Investment Management segment saw net revenues of $1.38 billion, a 7% increase, attributed to rising asset management fees [6]. Expenses and Income - Net interest income (NII) was $1.8 billion, down 23% year over year, while total non-interest expenses rose to $10.74 billion, a 2% increase [4]. - A provision benefit of $6 million was recorded, contrasting with a provision expense of $234 million in the prior-year quarter [4]. Capital Position - As of March 31, 2024, the book value per share was $55.60, up from $55.13 a year ago, while the tangible book value per share increased to $41.07 from $40.68 [7]. Share Repurchase - In the reported quarter, Morgan Stanley repurchased 12 million shares for a total of $1 billion [8]. Future Outlook - Management anticipates stable NII in the Institutional Securities segment for Q2 2024 and expects wealth management segment pre-tax margins to be in the mid-20% range [9]. - Long-term objectives include achieving a return on tangible common equity (ROTCE) of 20% or more and maintaining an efficiency ratio of less than 70% [10]. Industry Comparison - Morgan Stanley's performance is compared to Goldman Sachs, which reported a 15.4% increase in stock price over the past month and a year-over-year revenue growth of 16.3% [13].