On Wednesday, Morgan Stanley (NYSE: MS) experienced an adjustment in its stock outlook by Jefferies, with its shares target being raised to $109 from the previous $107. The investment firm retains a Buy rating on the stock. This decision comes after Morgan Stanley posted its first-quarter results for 2024.
The enhancement in the price target is attributed to an upward revision of earnings per share (EPS) estimates for the second quarter and the full year of 2024. The new forecasts by Jefferies stand at $1.74 for the second quarter and $7.25 for the year, up from the former estimates of $1.59 and $6.50, respectively. The revised estimates are based on the ongoing robust performance in Investment Banking (IB), marked by growing backlogs, and an improvement in margin profile.
Jefferies noted a decrease of 7% in non-compensation expenses for 2024 compared to the previous estimates, signifying a more efficient cost structure at Morgan Stanley. This improved margin profile is a significant factor in the positive outlook.
The report by Jefferies also highlighted that within the quarter, Wealth Management (WM) margins saw an expansion on a sequential basis, despite net interest income (NII) remaining flat. This stability is expected to continue into the second quarter. The firm's strong organic growth, favorable market conditions, and heightened client engagement were key contributors to this performance.
Morgan Stanley's recent financial results and the subsequent analysis by Jefferies suggest a positive trajectory for the firm, reflected in the raised price target and sustained Buy rating.
InvestingPro Insights
Morgan Stanley's (NYSE: MS) recent performance has not only caught the eye of Jefferies but has also been reflected in various metrics and analyst actions. With a solid market capitalization of $145 billion and a trailing twelve-month P/E ratio that stands at a reasonable 16.11, the company's financial health appears robust. A testament to their stability is the fact that Morgan Stanley has raised its dividend for 10 consecutive years, with the latest data showing a healthy dividend yield of 3.65% as of early 2024.
InvestingPro data underscores the company's financial stability, highlighting a gross profit margin of an impressive 86.47% over the last twelve months as of Q4 2023. Additionally, Morgan Stanley's liquid assets exceed its short-term obligations, which is an encouraging sign for investors concerned about the company's liquidity. The firm's commitment to shareholder returns is further evidenced by its track record of maintaining dividend payments for 32 consecutive years.
For those looking to delve deeper into Morgan Stanley's prospects, there are additional InvestingPro Tips available, which include insights on the company's cash flow situation and analyst earnings revisions. Interested readers can find more information and tips on InvestingPro, along with an exclusive offer: use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. In total, there are over 9 additional InvestingPro Tips that can help investors make more informed decisions regarding Morgan Stanley.
As Morgan Stanley continues to be a prominent player in the Capital Markets industry, with analysts predicting profitability this year, these insights could be crucial for investors considering the company's stock in their portfolio.
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