On Friday, Evercore ISI increased its price target on Morgan Stanley (NYSE:MS) shares from $140.00 to $150.00, while maintaining an Outperform rating. The adjustment comes after the financial services firm reported earnings that exceeded expectations.
Currently trading at $135.81, Morgan Stanley shares have surged 66.75% over the past year and are trading near their 52-week high of $136.24. According to InvestingPro analysis, the stock appears slightly overvalued at current levels. Morgan Stanley’s performance was bolstered by robust results in investment banking and continued growth in client assets, which have reached approximately $8 trillion, along with approximately 5% organic growth.
Morgan Stanley achieved a high return on equity, with 20% in the fourth quarter and 19% for the year. Additionally, the firm is noted to have a significant amount of excess capital, approximately 200 basis points. The company’s financial strength is further evidenced by its 32-year streak of maintaining dividend payments, with a current yield of 2.72%. InvestingPro data reveals that Morgan Stanley has raised its dividend for 11 consecutive years, demonstrating consistent shareholder returns.
Evercore ISI expressed a favorable view of the underlying trends at Morgan Stanley, despite noting that wealth management asset organic growth is trending toward the lower end of the 5% to 7% target range. The firm’s net new assets were also below the goal of $1 trillion every three years.
The analyst expects headwinds affecting net new asset targets to reverse, given a more constructive environment for increased deal activity and client engagement across both institutional and retail sectors. The positive outlook is supported by strong deal pipelines, rising CEO confidence, and higher client asset levels, with expectations that the momentum from the previous year will continue.
In light of these factors, Evercore ISI raised its FY25 earnings per share (EPS) estimate for Morgan Stanley to $8.15 from $8.09, slightly below the consensus of $8.22. This increase is attributed to higher trading revenues, positive operating leverage in the Institutional Securities Group (ISG), greater net interest income (NII) in the Wealth Management division, and higher asset management fees, offset partly by lower net new assets and a higher tax rate.
Furthermore, the FY26 EPS estimate was lifted to $9.20 from $8.60, compared to a consensus of $9.14. The price target of $150 is based on approximately 16 times the projected FY26 EPS. Evercore ISI’s revision reflects confidence in Morgan Stanley’s continued earnings growth and operational strength.
With impressive revenue growth of 14.71% and a P/E ratio of 16.42x, Morgan Stanley continues to demonstrate strong fundamentals. For deeper insights into Morgan Stanley’s valuation and growth prospects, including 12 additional exclusive ProTips and comprehensive financial analysis, visit InvestingPro.
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