Morgan Stanley's Diversified Business Model Drives Q2 Success, Analyst Projects Increased Shareholder Returns

RBC Capital Markets analyst Gerard Cassidy raised the price target of Morgan Stanley MS to $108 from $91, maintaining a Sector Perform rating following strong second-quarter FY24 results.

Yesterday, the bank reported EPS of $1.82, beating the consensus of $1.65, and sales of $15.02 billion, exceeding the consensus of $14.30 billion.

The analyst writes that the bank’s diversified business model, including Institutional Securities, Wealth Management, and Investment Management, drove strong quarterly results with mid-teens ROTCE, led by its premier investment banking and trading operations.

If market conditions remain favorable through the latter half of 2024, Morgan Stanley is poised to sustain these advantages, buoyed by its strong presence in investment banking and trading sectors, says the analyst.

Given the company’s strong excess capital position, the analyst anticipates the bank will reward shareholders with common share repurchases and increased dividends, which should result in the company returning up to 100% of earnings.

Cassidy adjusted the 2024 and 2025 EPS projections to $6.95 and $7.80, up from $6.67 and $7.75, respectively. This revision reflects anticipated gains in net interest income and non-interest income, tempered by increased expenses.

Investors can gain exposure to the stock via IShares U.S. Broker-Dealers & Securities Exchanges ETF IAI and Invesco KBW Bank ETF KBWB.

Also Read: Morgan Stanley Capital Markets Segment Shines, Wealth Metrics Lag: Analysts Praise ‘Strong Cost Discipline’

Apart from this, Barclays raised the price target to $121 from $116 and maintained an Overweight rating, and, Evercore ISI Group upped the price target to $115 from $105 and reiterated the Outperform rating.

Price Action: MS shares are up 0.45% at $106.70 at the last check Wednesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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