Morgan Stanley stock holds as JMP reiterates Market Perform

On Monday, JMP analysts maintained a Market Perform rating on Morgan Stanley (NYSE:MS), a $174 billion financial powerhouse, following the company’s announcement of its first-quarter earnings for 2025. The firm’s performance exceeded expectations, with Morgan Stanley reporting an earnings per share (EPS) of $2.60, which surpassed both JMP’s prediction of $2.28 and the consensus estimate of $2.21. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value calculations, with a P/E ratio of just 12.7x.

The financial institution’s net revenues were 6.6% higher than JMP’s projections, primarily due to a record-breaking quarter in Sales & Trading revenues. Equity revenues were notably strong, coming in 20.5% above JMP’s model and showing a 45% year-over-year increase. Investment Banking revenue also showed resilience, aligning with JMP’s estimates and achieving an 8% growth compared to the previous year despite the volatile public market conditions.

Morgan Stanley demonstrated cost management, with expenses aligning closely with analyst expectations. The compensation ratio was slightly lower than anticipated at 42.4%, compared to the estimated 42.8%. Non-compensation expenses also came in 1.5% below JMP’s forecast. However, the tax rate was a bit higher than expected, reported at 21.2% against the predicted 20.5%.

The analyst, Brian McKenna, noted the positive aspects of Morgan Stanley’s quarterly results, highlighting the firm’s ability to capitalize on market volatility and maintain a relatively constructive outlook. Despite the positive earnings report and the solid performance in key areas, JMP did not alter its Market Perform rating on Morgan Stanley shares.

In other recent news, Morgan Stanley reported impressive financial results for the first quarter of 2025, surpassing analyst expectations with earnings per share of $2.60, compared to the anticipated $2.26. The company’s revenue also exceeded forecasts, reaching $17.7 billion against a predicted $16.76 billion. Despite these positive earnings and revenue results, Morgan Stanley’s stock experienced a slight decline in pre-market trading. The firm’s strong financial performance is attributed to its significant investments in technology and innovation, particularly in the ETRADE platform and wealth management services. Morgan Stanley maintained a robust Return on Tangible Common Equity of 23%, reflecting its ability to navigate challenging market conditions. Additionally, the company conducted a $1 billion common stock buyback, further demonstrating its financial strength. While the company’s outlook remains cautiously optimistic, ongoing economic uncertainties and geopolitical tensions continue to pose potential challenges.

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