Morgan Stanley posts solid trading results in the first quarter

Morgan Stanley (NYSE:MS) released its quarterly earnings report on Thursday that missed analysts’ estimates for earnings and revenue. The American multinational investment bank also said that support from upbeat trading results may prove to be short-lived as the ongoing Coronavirus continues to weigh on performance.

Morgan Stanley was reported less than 2% down in premarket trading on Thursday. The health crisis, the investment bank added, has weighed on all of its major businesses in the first quarter. Morgan Stanley set aside roughly £310 million for credit losses.

Morgan Stanley’s Q1 Financial Results Versus Analysts’ Estimates

According to Refinitiv, analysts had expected the U.S bank to print £7.78 billion in revenue in the first quarter. On the earnings front, they had anticipated 91 pence per share for Morgan Stanley in the recent quarter. In its financial report on Thursday, however, the bank posted a lower £7.59 billion in revenue in Q1 and said that it made 81 pence of earnings per share that also missed experts’ forecast.

At £1.36 billion, the bank’s total earnings cam 30% lower as compared to the same quarter last year.

According to FactSet’s estimate, the investment bank was expected to generate £3.42 billion from its wealth management division. In terms of bond-trading, analysts had forecast £1.37 billion in revenue from fixed income, and another £1.78 billion from equities.

Morgan Stanley also missed the estimate for revenue from the wealth management division recording a lower £3.23 billion revenue from this unit in Q1 that translates to an 8% decrease from a year-ago figure.  The bank’s investment management division noted £553 million in revenue that was 14% lower than last year and missed the experts’ forecast of £606 million.

Morgan Stanley Expects 13%-15% Of Companywide Returns

Trading results, however, came out strong for Morgan Stanley in the recent quarter. The bank registered £1.76 billion in revenue from fixed income and £1.94 billion from equities.

According to CEO James Gorman, the U.S investment bank is expecting 13% to 15% of companywide returns in 2 years. Returns are expected to widen to 15% to 17% in the years after that.

At £30.29 per share, Morgan Stanley is currently trading more than 25% down year to date in the stock market. Owing to the Coronavirus driven downward rally, the U.S investment bank has now lost all gains that it posted in 2019.

At the time of writing, Morgan Stanley is valued at £48 billion and has a price to earnings ratio of 7.40.