Morgan Stanley’s stock (NYSE: MS) has seen a 7% loss year-to-date, compared to the 9% rise in the S&P 500. The stock price dropped 5.2% following news of a regulatory probe against its wealth management unit. Currently trading at $87 per share, the stock is 9% below its fair value of $95 according to Trefis.
Despite showing gains of 20% since early January, Morgan Stanley’s stock has been inconsistent, with returns of 43% in 2021, -13% in 2022, and 10% in 2023. This has led to underperformance compared to the S&P 500. The Trefis High Quality Portfolio, however, has consistently outperformed the benchmark index due to providing better returns with less risk.
In the fourth quarter of 2023, Morgan Stanley reported better-than-expected revenue figures, with total revenues of $12.9 billion, up 1% year-over-year. Investment banking and sales & trading segments saw gains, while wealth management and investment management revenues remained steady. However, there was a 35% drop in adjusted net income to $1.4 billion due to an increase in noninterest expenses.
For the full year 2023, the company’s top line grew 1% to $54.14 billion. Wealth management revenues increased by 8%, but were offset by lower investment banking and sales & trading income. Adjusted net income was down 19% year-over-year to $8.53 billion. Moving forward, Morgan Stanley’s revenues are expected to stay around $56.8 billion in FY 2024, with an estimated adjusted net income of $9.82 billion and annual GAAP EPS of $6.26.
With a P/E multiple of just above 15x, Morgan Stanley is expected to reach a valuation of $95. Despite recent challenges and underperformance, the company is positioned for growth in the coming year. The uncertain macroeconomic environment may pose challenges, but improved net income margins and solid revenue projections indicate a positive outlook for Morgan Stanley in the near future. Investors may find opportunities for growth and value in this financial institution.
