Morgan Stanley’s (MS) business diversification significantly reduced its revenue and earnings volatility compared with the financial crisis in 2008 to 2009, RBC Capital Markets said Tuesday in a report.
RBC raised Morgan Stanley’s price target to $91 from $85 and kept its sector perform rating.
The investment bank on Tuesday reported Q4 earnings of $0.85 per share, weighed down by certain charges, compared with $1.26 a year earlier. Revenue rose to $12.9 billion from $12.75 billion.
Morgan Stanley’s core EPS was $1.15 based on RBC’s calculation, compared with $1.31 a year earlier. That beat RBC’s estimate of $0.97, mainly driven by better-than-expected net interest income and a lower-than-expected effective tax rate, according to the report.
RBC raised its 2024 EPS estimate to $6.15 from $6.05 and maintained its 2025 EPS estimate of $7.55.
Morgan Stanley is expected to implement stock buybacks and dividend increases using its excess capital, resulting in the company returning up to 100% of earnings, RBC said.
Shares of Morgan Stanley fell 2.3% in recent Wednesday trading. J.P. Morgan Securities downgraded the stock to neutral from overweight, and Keefe Bruyette & Woods downgraded the stock to market perform from outperform. Both analysts cut their price targets.