Morgan Stanley stock struggling at $80 resistance after better than expected Q1 results

Written by: Stanko Iliev
April 18, 2021
  • Morgan Stanley reported better than expected Q1 results last week
  • Total revenue has increased by 60.7% Y/Y to $15.72B
  • Morgan Stanley repurchased $2.1B of common stock during Q1 2021

Morgan Stanley (NYSE: MS) reported Q1 results last week; total revenue has increased by 60.7%, and the Board of directors declared a $0.35/quarterly share dividend, which is in line with previous. Despite better than expected earnings results, shares of this bank are still trading below $80 resistance.

Fundamental analysis: Morgan Stanley reported better than expected Q1 results last week

Morgan Stanley reported Q1 2021 results on Friday; total revenue has increased by 60.7% Y/Y to $15.72B while Q1 GAAP EPS was $2.19 (beats by $0.48). Total revenue has increased above the expectations (+$1.53B), and the quarter’s efficiency ratio was 66%.

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“The first quarter of 2021 was a significant record for the firm and for many of our businesses. It was marked by some truly extraordinary highs, numerous performance records, the closing of the Eaton Vance deal, our second strategic transaction in the last year, and one very complex event relating to the collapse of the hedge fund, Archegos,” said James Gorman, Chairman, and CEO of Morgan Stanley.

Wealth Management revenue of $5.96B rose 47% Y/Y while the net revenue from the Investment Management segment rose 90% Y/Y to $1.31B. Morgan Stanley continues to add new clients at a record pace, and the Board of directors declared a $0.35/share quarterly dividend.

This bank has proven its stability during the Covid-19 pandemic, and the first-quarter earnings results showed that Morgan Stanley is moving in the right direction. Despite this, Morgan Stanley shares weakened on Friday after Bloomberg reported that the bank recorded a $911M loss related to the collapse of Archegos Capital.

Its share repurchase program is resuming in 2021, and it is important to mention that Morgan Stanley repurchased $2.1B of common stock during Q1 2021. Profit is expected to grow in the upcoming quarters, and if you are looking for a solid dividend income and good total return potential, shares of this bank are not a bad choice.

Technical analysis: $70 represents a strong support level

Morgan Stanley shares have been moving in an uptrend last several months, and for now, there is no signal of the trend reversal. Despite better than expected earnings results, shares of this bank are still trading below $80 resistance.

Data source: tradingview.com

The critical support levels are $70 and $60; $80, $85, and $90 represent the current resistance levels. Morgan Stanley stock remains in a buy zone, but if the price falls below the $70 support level, it would be a firm “sell” signal, and we have the open way to $60 support.

Summary

Morgan Stanley reported better than expected Q1 results last week, and according to the technical analysis, shares of this bank remain in a buy zone. The first quarter of 2021 was a significant record for the bank, and total revenue has increased by 60.7% Y/Y to $15.72B.