Should I buy Morgan Stanley shares after Q4 results?

By: Stanko Iliev
Stanko Iliev
Stanko dedicates himself to providing investors with relevant information they can use to make investment decisions. He loves the… read more.
on Jan 19, 2022
  • Morgan Stanley reported strong Q4 results
  • Total revenue has increased by 6.8% Y/Y
  • Shares remain in a buy zone

Morgan Stanley (NYSE: MS) shares continue to trade in a bull market after strong fourth-quarter results.

Net revenue for the full fiscal year reached $59.8 billion, representing a record in the bank’s history, and Morgan Stanley entered 2022 with a strong position.

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Morgan Stanley entered 2022 with a strong position

Morgan Stanley reported strong fourth-quarter results this Wednesday; total revenue has increased by 6.8% Y/Y to $14.55 billion, while Non-GAAP EPS was $2.08 (beats by $0.12).

It is important to mention that Morgan Stanley has beaten earnings per share estimates 100% of the time over the last two years, and profitability should rise in 2022 due to a combination of positive factors.

Total revenue has increased slightly below the expectations (-70 million), and the bank repurchased approximately $2.8 billion of common stock during the fourth quarter.

Investment banking revenue of $2.58 billion rose 6% from a year ago, asset management revenue of $5.40 billion rose 37%, while trading revenue of $2.39 billion sank 26%.

Commissions and fees of $1.31 billion also fell 3% Y/Y, but the positive information is that Morgan Stanley’s compensation expenses of $5.49 billion didn’t change too much compared with the fourth quarter of 2020.

Chairman and CEO James Gorman said that net revenue for the full fiscal year reached $59.8 billion, which represents a record in the bank’s history.

Morgan Stanley entered 2022 ahead of a plan which is the result of consistent and focused execution on integration and expansion initiatives.

Morgan Stanley successfully completed its acquisition of Eaton Vance, and the bank created a premier asset manager, which itself has $1.6 trillion of assets under management. Chairman and CEO James Gorman added:

The growth we saw in 2021 has been unprecedented; with the early successes of the E*TRADE and Eaton Vance acquisitions and the bank’s overall momentum, we entered 2022 with a strong position.

Excluding integration-related expenses, ROTCE was 20.2% for the full year, while the full-year efficiency ratio was 67.1%.

The fourth-quarter earnings results showed that Morgan Stanley is moving in the right direction, while JPMorgan analyst Vivek Juneja said that he expects significant upside potential for banks’ stocks in the upcoming months.

Technical analysis

Data source: tradingview.com

Morgan Stanley shares have advanced more than 30% since the beginning of January 2021, and the current share price stands at $95.

Morgan Stanley shares remain in a buy zone; still, if the price falls below the $90 support level, it would be a firm “sell” signal.

Summary

Morgan Stanley reported strong fourth-quarter results this Wednesday, and according to technical analysis, shares of this bank remain in a buy zone. Morgan Stanley has proven its stability during the  2021 fiscal year, and CEO James Gorman said that net revenue for the full fiscal year reached $59.8 billion, representing a record in the bank’s history.

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