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Results: Morgan Stanley Exceeded Expectations And The Consensus Has Updated Its Estimates

Morgan Stanley (NYSE:MS) just released its latest first-quarter results and things are looking bullish. It was overall a positive result, with revenues beating expectations by 5.1% to hit US$15b. Morgan Stanley also reported a statutory profit of US$2.02, which was an impressive 22% above what the analysts had forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Morgan Stanley

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earnings-and-revenue-growth

Taking into account the latest results, the consensus forecast from Morgan Stanley's 20 analysts is for revenues of US$57.5b in 2024. This reflects a modest 5.5% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to soar 25% to US$6.91. In the lead-up to this report, the analysts had been modelling revenues of US$56.7b and earnings per share (EPS) of US$6.44 in 2024. So the consensus seems to have become somewhat more optimistic on Morgan Stanley's earnings potential following these results.

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The consensus price target was unchanged at US$97.63, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Morgan Stanley at US$118 per share, while the most bearish prices it at US$83.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 7.4% growth on an annualised basis. That is in line with its 7.1% annual growth over the past five years. Juxtapose this against our data, which suggests that other companies (with analyst coverage) in the industry are forecast to see their revenues grow 7.3% per year. So although Morgan Stanley is expected to maintain its revenue growth rate, it's only growing at about the rate of the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Morgan Stanley's earnings potential next year. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Morgan Stanley. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Morgan Stanley analysts - going out to 2026, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 2 warning signs for Morgan Stanley you should be aware of.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.