We have issued an updated research report on Morgan Stanley MS on Jun 24, 2015. We believe the company’s consistent growth, diversified product portfolios, enhanced capital deployment plans and restructuring efforts aptly differentiate it from peers.
Morgan Stanley enjoys a considerable competitive advantage based on the relatively consistent growth momentum in its core Institutional Securities’ franchise. Also, over the last few years, the company has undertaken initiatives to restructure its operations with an aim to lower balance sheet risks and focus on other two less capital-intensive businesses. We believe such measures will stabilize the company’s earnings going forward.
Also, Morgan Stanley has been selling/closing its non-core operations in order to concentrate more on its profitable units and abide by new regulations. We believe shedding of non-core business is likely to improve the company’s profitability in the long run.
Over the last 30 days, the Zacks Consensus Estimate for the stock inched up nearly 1% for 2015 to $3.00 per share. For 2016, the Estimate grew 2 cents to $3.37 per share over the same time frame.
On the flip side, mounting operating expenses remain a major concern for Morgan Stanley. Expenses increased at a 5-year CAGR of 5.2% (2010–2014). Though expense-saving initiatives are being undertaken by the company, we feel these efforts will take time to bear fruit. Moreover, the company’s continuous investments in franchise are anticipated to keep expenses high.
Currently, Morgan Stanley carries a Zacks Rank #2 (Buy).
Other Stocks Worth Considering
Other financial stocks that are worth a look include The Goldman Sachs Group, Inc. GS, JMP Group LLC JMP and WisdomTree Investments, Inc. WETF. All three stocks hold the same Zacks Rank as Morgan Stanley.
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