Should I buy Morgan Stanley shares ahead of first-quarter earnings results?

By:
on Apr 10, 2022
  • Morgan Stanley will announce first-quarter earnings results on April 14
  • The impact of the Russian-Ukrainian war is likely to hurt first-quarter profit
  • $80 represents the current support level

Morgan Stanley (NYSE: MS) shares have weakened more than 15% since the beginning of the 2022 year, and the current price stands at $84.06.

Morgan Stanley is scheduled to announce first-quarter earnings results on Thursday, April 14, before the market opens, and according to Refinitiv data, the profit of Morgan Stanley is expected to fall in the March quarter, compared with the cumulative profit in the December quarter.

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The impact of the Russian-Ukrainian war is likely to hurt first-quarter profit

Morgan Stanley has proven its stability during the whole 2021 fiscal year, and the fourth-quarter earnings results showed that it is moving in the right direction.

Total revenue has increased by 6.8% Y/Y to $14.55 billion in the fourth quarter, while the non-GAAP earnings per share were $2.08 (beats by $0.12).

Net revenue for the full fiscal year reached $59.8 billion, which represents a record in the bank’s history, and Morgan Stanley entered 2022 ahead of a plan.

Morgan Stanley is scheduled to announce first-quarter earnings results on April 14, and it is important to say that Morgan Stanley has beaten earnings per share estimates 100% of the time over the last two years.

According to Refinitiv data, the combined net profits of top global banks, including Morgan Stanley, are expected to fall in the first quarter of 2022.

Lower fee revenue and trading losses due to market volatility triggered by the impact of the Russian-Ukrainian war are likely to hurt first-quarter profits.

The uncertainty coming from the Russia-Ukraine war and related sanctions from western nations has spread across commodities and through fixed income and equity markets. Andrew Dinnhaupt, portfolio manager at Franklin Templeton, added:

Market volatility can make issuing equity and debt more difficult, reducing income for these areas of the business that focus on underwriting new stocks and bonds as a major revenue source. This could weigh on banks’ bottom lines, even if their traditional banking operations get a lift from higher (net interest income) and faster loan growth.

The uncertainty of potential outcomes between Ukraine and Russia continues to worry investors, but Morgan Stanley entered 2022 with a strong position, the current dividend yield stands around 3.3%, and with a market capitalization of $147 billion, shares of this bank are not expensive.

$80 represents the current support level

Morgan Stanley shares have weakened more than 15% since the beginning of the 2022 year, and for now, bears remain in control of the price action.

Data source: tradingview.com

The current support level stands at $80, while $100 represents the strong resistance level. If the price falls below $80, it would be a firm “sell” signal, and we have the open way to $70.

On the other side, if the price jumps above $100, the next target could be around $110.

Summary

Morgan Stanley has proven its stability during the whole 2021 fiscal year, and the bank will report first-quarter earnings results on Thursday, April 14, before the market opens. According to Refinitiv data, the combined net profits of top global banks, including Morgan Stanley, are expected to fall in the first quarter of 2022.

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