Earnings Season Preview: Morgan Stanley

Earnings season has kicked off and one of the major players in the banking industry, Morgan Stanley (NYSE: MS), will be releasing its earnings results for the second quarter on 14th July 2022. The expectation from Wall Street and the wider market is a decline on the year-on-year figures, largely driven by lower-than-expected revenues.

The past 6 months in the global economy have undoubtedly required skilful navigation through the plethora of challenges that have emerged during the post-pandemic recovery. Chief among these is Russia’s invasion of Ukraine, which has subsequently led to a surge in oil prices, a rise in inflation and ultimately an escalation in global interest rates, and more loan loss reserves are expected to have eaten away at profitability and added to the overall upheaval in the markets. Despite this, RBC Capital market analysts say they expect a revenue increase of 17% year-on-year from the big US Banks, and this growth can be attributed to fixed-income commodities and currencies business.

Morgan Stanley has seen a year where its share price has declined by over 13.5% in the past 12 months, and close to 29% down from the 52-week high it set in February. Wall Street’s expectations this quarter in terms of revenue is $13.53 billion which represents an 8.6% decline sequentially and a year-over-year loss of 12%. Quarterly earnings per share are forecast to be $1.61 per share in the upcoming report, which is a sequential decline of 22% and a yearly decline of 14.8%. Last quarter, the expectation from Morgan Stanley was earnings of $1.69 per share, and this was exceeded by 21.89% at $2.06.

Source: https://www.marketbeat.com/stocks/NYSE/MS/earnings/

In terms of the entire 2022 fiscal year, expectations are for revenue of $56 billion, which is a decline of 6.3%, and earnings per share of $7.25, representing a decline of 11.8%. The stock’s 52-week range is between $72.23-$109.73, and the bank provides shareholders an annual dividend of $2.80 (yield of 3.69%), which brings the total shareholder return over the past year to -13.5%.

Technical Analysis

At the writing, the price is at $75.94. Several equities research analysts have a consensus rating of “Hold” on the stock and an average price target of $106.00. In terms of market structure, price action has approached the $72.00 area in a corrective way, creating a descending channel. This sluggish momentum at this point of interest alludes to the possibility of a reversal to the upside being the next move, if the price breaks above the $84.00 mark in an impulsive wave.



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Ofentse Waisi  

Market Analyst

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