Morgan Stanley Stock Intrinsic Value – Morgan Stanley Sees Sharp Decline in Q1 Revenues Due to Fee Income Loss
April 20, 2023
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Morgan Stanley ($NYSE:MS) is one of the world’s leading financial services firms, providing a wide range of investment banking, securities, investment management, and wealth management services.
However, the firm is expected to suffer a sharp decline in its Q1 revenues due to a decrease in fee income. According to analysts, this drop in revenue will be driven primarily by a decrease in the global fees that Morgan Stanley earns from underwriting and advisory services. The reduction in fee income is attributed to the market volatility caused by the ongoing pandemic, as well as a decrease in the number of initial public offerings and mergers and acquisitions that Morgan Stanley typically handles.
In addition, lower trading activity has caused the firm to suffer from a decline in investment banking fees. This predicted decrease in revenues could have significant impacts on Morgan Stanley’s overall performance, as fee income is the firm’s largest source of revenue. Unless the firm is able to address this decline in fee income, it could be facing a large drop in its Q1 revenues.
Stock Price
On Tuesday, Morgan Stanley saw their stock open at $89.1 and close at $89.8, up by 0.6% from last closing price of 89.3. Although the company has made efforts to mitigate the effects of this disruption, the loss of fee income had a substantial impact on its first-quarter results. With the economic outlook still uncertain, Morgan Stanley will continue to monitor developments in order to ensure it remains well-positioned to generate profitable revenues in the future. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Morgan Stanley. More…
| Total Revenues | Net Income | Net Margin |
| 50.21k | 10.54k | 22.7% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Morgan Stanley. More…
| Operations | Investing | Financing |
| -6.4k | -11.63k | 22.71k |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Morgan Stanley. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 1.18M | 1.08M | 59.63 |
Key Ratios Snapshot
Some of the financial key ratios for Morgan Stanley are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 8.9% | – | – |
| FCF Margin | ROE | ROA |
| -18.9% | 8.8% | 0.7% |
Analysis – Morgan Stanley Stock Intrinsic Value
At GoodWhale, we have completed an analysis of MORGAN STANLEY‘s wellbeing. Through our proprietary Valuation Line, we have calculated MORGAN STANLEY’s intrinsic value to be around $87.0. This is a fair price for the stock, however the current price is slightly overvalued by 3.2% at $89.8. We believe that investors should consider this relative value when making an investment decision. More…
Peers
Morgan Stanley is an American multinational investment bank and financial services company headquartered in New York City. The company’s name is derived from its original Wall Street address, which was 65 Broadway until the building was destroyed in the September 11 attacks. Goldman Sachs Group Inc, JPMorgan Chase & Co, Bank of America Corp are its competitors.
– Goldman Sachs Group Inc ($NYSE:GS)
Goldman Sachs Group Inc. is an American multinational investment bank and financial services company headquartered in New York City. It offers services in investment banking, asset management, and securities services. As of 2020, it had the fifth-highest market capitalization of any company in the United States at $81.6 billion. Goldman Sachs has a return on equity of 9.0% as of 2022. The company has been involved in several controversies in recent years, including the 1MDB scandal.
– JPMorgan Chase & Co ($NYSE:JPM)
JPMorgan Chase & Co is an investment bank and financial services company headquartered in New York City. The company has a market capitalization of $373.1 billion as of 2022. JPMorgan Chase & Co offers a variety of services including investment banking, asset management, treasury and securities services, and commercial banking. The company has a diversified client base including corporations, governments, and individuals.
– Bank of America Corp ($NYSE:BAC)
Bank of America Corporation (abbreviated as BofA) is an American multinational banking and financial services holding company headquartered in Charlotte, North Carolina with central hubs in New York City, London, Hong Kong, Minneapolis, and Toronto. It is the second largest bank holding company in the United States by assets. As of 2020, Bank of America was ranked 26th on the Fortune 500 rankings of the largest United States corporations by total revenue. The company serves clients in more than 150 countries. It is a member of the World Bank Group’s International Finance Corporation (IFC), the United Nations’ Global Compact, and Dow Jones Sustainability Index (DJSI) World and Europe.
Bank of America’s market cap is $287.93B as of 2022.
Summary
This is a result of decreased trading and investment banking activities, as well as low interest rates which have had a negative impact on their fixed income revenue. Investors should take note of this and consider the financial health of the company before investing. Additionally, Morgan Stanley has had to cut costs in order to remain competitive, reducing employment and other overhead costs.
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