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MOSCOW, RUSSIA—(BUSINESS WIRE)—(BUSINESS WIRE)—(BUSINESS WIRE)—(BUSINESS WIRE)— Morgan Stanley’s corporate emblem at a branch in… [+] downtown Moscow; Morgan Stanley has turned down Stockmann’s Nevsky Centre shopping mall in St Petersburg. TASS/Maxim Grigoryev (Photo courtesy of Maxim Grigoryev) (Photo courtesy of TASS/Getty Images)
TASS/Maxim Grigoryev
On Thursday, July 15, Morgan Stanley (NYSE: MS) will release its fiscal Q2 2021 results. Morgan Stanley is expected to beat consensus earnings predictions, but revenues will fall short of expectations. In the first quarter of 2021, the company had better-than-expected results, with sales increases across the board. While the bank’s sales and trade and investment banking operations led the way, both wealth management and investment management saw substantial asset growth. In the second quarter, we expect the wealth and investment management businesses to continue to drive growth, however sales and trading and investment banking revenues are likely to decline sequentially. Morgan Stanley’s worth, according to our estimates, is roughly $89 per share, or 4% less than the current market price of $93. For additional information, see our interactive dashboard analysis of Morgan Stanley’s pre-earnings: What To Expect in Q2?
(1) In the second quarter, revenues are likely to be slightly lower than consensus projections.
Morgan Stanley’s fiscal Q2 2021 revenues are expected to be about $13.72 billion, slightly lower than the $13.96 billion consensus estimate, according to Trefis. MS’ top line increased by 16 percent to $48.2 billion in 2020, owing to increases in sales and trading and investment banking income. The increase was aided by an increase in wealth management income. The acquisition of E*TRADE in the fourth quarter of 2020 gave the wealth management total client assets a significant boost. The institutional securities (sales & trading and investment banking) segment grew 66 percent year over year in the first quarter of 2021, continuing the trend. Higher deal volumes of IPOs, blocks, and follow-on offerings contributed to a 3.5x increase in equity underwriting revenues. Furthermore, net new assets and fee-based flows drove robust revenue growth in the wealth and investment management areas. However, due to decreased underwriting transaction volume, we expect institutional securities revenues to decline sequentially in Q2. All other businesses, on the other hand, are expected to continue growing throughout the quarter.
With the recovery of the economy, sales and trading and investment banking revenues are projected to stabilize in the following months. In 2021, growth in the institutional securities category is expected to be flat. The wealth management and asset management companies, on the other hand, are predicted to rise this year. In FY2021, the company’s revenues are expected to reach $54.6 billion. More information about Morgan Stanley’s segments can be found in our revenue dashboard.
2) Earnings per share are expected to exceed consensus projections.
According to Trefis analysis, Morgan Stanley’s adjusted earnings per share for the second quarter of 2021 will be $1.72, up 4% from the consensus expectation of $1.65. MS’ profitability increased in 2020 as a result of higher revenues and decreased operating expenses as a percentage of revenues. The same pattern persisted in the first quarter of 2021, and it is projected to continue in the second quarter.
ADDITIONAL INFORMATION FOR YOU
In FY2021, Morgan Stanley’s net income margin is expected to decline, resulting in a net income of $10.7 billion. In addition, the bank recently launched a $12 billion share repurchase program that would last for the next four quarters. In FY2021, MS EPS will rise marginally to $6.89 as a result of this.
(3) Estimated stock price is 4% lower than current market pricing.
With an EPS forecast of around $6.89 and a P/E ratio of slightly around 13x in fiscal 2021, Morgan Stanley’s valuation corresponds to a price of $89, which is 4% lower than the current market price of roughly $93.
Note: P/E Multiples are calculated using the closing share price and reported (or predicted) Adjusted Earnings for the entire year.

Trefis EPS
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