Will Morgan Stanley deliver stock price gains after second quarter results?

Does Morgan Stanley (NYSE:MS) offer upside potential?

Morgan Stanley
Morgan Stanley

The stock price of Morgan Stanley (NYSE:MS) has gained around 2% today after the company released second quarter results. Its net revenues increased from $9.5 billion in the same quarter of the previous year to $10.6 billion.

Net income was $2.4 billion or $1.30 per share. This is significantly up on the $1.8 billion or $0.87 per share reported from the comparable period. The company’s efficiency ratio was cut by 1 percentage point to 71%, while its annualized return on average common equity was 13%. The annualized return on average tangible common equity was 14.9% in the current quarter.

Morgan Stanley recorded strong performance in its Investment Banking and Sales and Trading segments. Meanwhile, Wealth Management continued to deliver robust results in my opinion, with it having a pre-tax margin of 26.8%.

Quarterly dividends were increased to $0.30 per share. Share repurchases of up to $4.7 billion have been authorized for the period through the second quarter of 2019.

I was particularly impressed by the breadth of growth in the company’s second quarter results. It was able to show a positive performance across all of its businesses and geographies, with organic growth prospects being upbeat in my opinion.

The prospects for the Morgan Stanley stock price appear to be positive in my view. The outlook for the US and global economies seems to be impressive. Although there are fears of a full-scale trade war, the US economy is expected to post similar growth to that achieved recently through 2020.

Therefore, after a stock price rise of around 12% in the last year, I think the company could post improving performance in the long run. It seems to be experiencing sold performance across its business. This could help to catalyse investor sentiment after what appears to have been a solid second quarter of the fiscal year.








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Robert Stephens is a CFA Charterholder and works as an Equity Analyst. He is a keen private investor and has bought and sold stocks for 15 years, investing in a range of sectors and markets. He has previously written for Seeking Alpha and The Motley Fool, and now runs his own business. If you would like to contact Robert, please email [email protected] or contact him via one of the other methods on the 'Contact Us' page