Trading Morgan Stanley Post Q4 Earnings

February 3, 2023 4:09 am

Morgan Stanley was one of the last big investment banks to report fourth-quarter earnings. While most banks beat Wall Street’s expectations, the majority also posted a fall in investment banking fees.  

However, some analysts have honed in on Morgan Stanley’s results due to record revenues in its wealth management division. Learn more about what analysts are forecasting for the stock, the latest hedge fund activity and how to trade it below.

Stock: Morgan Stanley
Symbol for Invest.MT5 Account: MS
Date of Idea: 24 Jan 2023
Time Line: 1 – 6 months
Entry Level: $100.00
Target Level: $125.00
Position Size for Invest.MT5 Account: Max 5%
Risk: High
  • The Invest.MT5 account allows you to buy real stocks and shares from 15 of the largest stock exchanges in the world.

Past performance is not a reliable indicator of future results or future performance.

All trading is high risk and you can lose more than you risk on a trade. Never invest more than you can afford to lose as some trades will lose and some trades will win. Start small to understand your own risk tolerance levels or practice on a demo account first to build your knowledge before investing. 

Morgan Stanley Q4 Earnings Report

Here are some of the key highlights from the latest fourth-quarter earnings report from investment banking giant Morgan Stanley: 

  • Net income down to $2.11 billion, or $1.26 per share topping analyst estimates of $1.19 per share. 
  • Revenue was down to $12.75 billion from $14.52 billion the prior year but higher than analyst estimates of $12.64 billion. 
  • Wealth management revenue of $6.63 billion up 6% from the prior year. 
  • Trading revenue of $3.02 billion up from $2.39 billion from the prior year.  
  • Investment banking revenue was $1.46 billion down 17% from the prior year.  

Most banks reported a drop of around 50% in investment banking revenues in the last quarter due to the less merger and acquisition activity influenced by the aggressive interest rate hiking from the Federal Reserve and the uncertainty surrounding long-term borrowing costs.  

However, Morgan Stanley beat its peers due to record revenues from its wealth management division and an increase in revenue from trading operations. Chief executive of Morgan Stanley, James Gorman highlighted that the results are impressive considering the difficult market environment.  

Morgan Stanley is a bank that is considered by investors to be more of an investment banking play. It doesn’t have a large consumer division like Bank of America for example. This means, that the investment bank has relative stability in its fee-based businesses such as wealth management which gained an extra $310 billion in assets to manage last year.  

Of course, the sentiment around banking stocks will depend on the pace of interest rate hikes this year from the Federal Reserve so some uncertainty still remains. 

Morgan Stanley Hedge Fund Activity

The latest 13F filing report submitted to the Securities and Exchange Commission of 479 hedge funds, shows that hedge funds increased their holdings in Morgan Stanley by 2.6 million shares in the last quarter.

However, this could be simply down to being massively underweight in the investment banking sector as they have decreased their holdings every quarter since January 2021.

Source: TipRanks, 23 Jan 2023

Morgan Stanley Stock Forecast – What do the Analysts Say?

According to analysts polled by TipRanks for a Morgan Stanley stock forecast in the past 3 months, there are currently 8 buy, 8 holds and 1 sell ratings on the stock. The highest price level for a Morgan Stanley stock forecast is $125.00 with the lowest price target at $84.00. 

The average price target for a Morgan Stanley stock forecast is $100.48.

Source: TipRanks, 23 Jan 2023

An Example Trading Idea for the Morgan Stanley Stock Price

An example trading idea for the Morgan Stanley share price could be as follows:  

  • Buy the stock on a break above $100.00 to allow for current market volatility. 
  • Target the highest analyst price target around $125.00. 
  • Keep your risk small at a maximum of 5% of your total account.   
  • Time Line = 1 – 6 months  
  • If you buy 10 Morgan Stanley shares:  
    • If the target is reached = $250.00 potential profit ($125.00 – $100.00 * 10 shares).   

Remember that markets go up and down and it is unlikely the share price will move up in a straight line. In fact, it may even go much further down before it rises, especially considering how volatile banking stocks can be.

Be sure to exercise good risk management and always know how much you could potentially lose on a trade and the risks involved, as well as the costs.

With the Admirals Invest.MT5 account you can buy and sell US stocks with a commission from $0.02 per share. This means buying 10 shares in Morgan Stanley stock would result in a commission of $0.20 ($0.02 * 10 shares) for executing a per-side transaction.

There is a low minimum transaction fee of $1. So, the example trading idea above would result in a commission of just $1 overall. 

How to Buy Morgan Stanley Stock in 4 Steps  

With Admirals, you can buy shares in companies like Morgan Stanley with a low commission of just $0.02 per share and a low minimum commission of just $1 on US stocks. 

  1. Open an account with Admirals to access the Trader’s Room.   
  2. Click on Trade on one of your live or demo accounts to open the web platform.   
  3. Search for your stock at the bottom of the Market Watch window and drag the symbol onto the chart.   
  4. Use the one-click trading feature, or right-click and open a trading ticket to input your trade size, stop loss and take profit level. 
Source: Admirals MetaTrader 5 Web. Past performance is not a reliable indicator of future results, or future performance.

Click on the banner below to trade Morgan Stanley stock today. ▼▼▼ 

Do You See the Morgan Stanley Stock Price Moving Differently?   

Remember that all analytics and trading ideas are based on the personal view and experience of the author.  

If you believe there is a higher chance Morgan Stanley’s share price will move lower, then you can also trade short from a CFD (Contracts for Difference) trading account which Admirals also provide.  

The Trade.MT5 and Trade.MT4 account allows you to speculate on the price direction of stocks and shares using CFDs.  

This means you can trade long and short to potentially profit from rising and falling stock prices. Learn more about CFDs in this How to Trade CFDs article. 

INFORMATION ABOUT ANALYTICAL MATERIALS:   

The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter “Analysis”) published on the websites of Admirals’ investment firms operating under the Admirals trademark (hereinafter “Admirals”) Before making any investment decisions please pay close attention to the following:   

  • This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.    
  • Any investment decision is made by each client alone whereas Admirals shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content. 
  • With a view to protecting the interests of our clients and the objectivity of the Analysis, Admirals has established relevant internal procedures for the prevention and management of conflicts of interest. 
  • The Analysis is prepared by an independent analyst, Jitanchandra Solanki (analyst), (hereinafter “Author”) based on their personal estimations.    
  • Whilst every reasonable effort is taken to ensure that all sources of the content are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admirals does not guarantee the accuracy or completeness of any information contained within the Analysis.    
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  • Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, please ensure that you fully understand the risks involved. 

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