As you might know, Morgan Stanley (NYSE:MS) just kicked off its latest third-quarter results with some very strong numbers. It was overall a positive result, with revenues beating expectations by 9.8% to hit US$12b. Morgan Stanley also reported a statutory profit of US$1.66, which was an impressive 31% above what the analysts had forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Morgan Stanley after the latest results.
Taking into account the latest results, Morgan Stanley's 22 analysts currently expect revenues in 2021 to be US$45.1b, approximately in line with the last 12 months. Statutory earnings per share are forecast to fall 14% to US$5.17 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$45.0b and earnings per share (EPS) of US$5.16 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
The analysts reconfirmed their price target of US$61.06, showing that the business is executing well and in line with expectations. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Morgan Stanley, with the most bullish analyst valuing it at US$78.00 and the most bearish at US$50.00 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with the forecast 0.8% revenue decline a notable change from historical growth of 5.3% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 5.6% annually for the foreseeable future. It's pretty clear that Morgan Stanley's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Morgan Stanley's revenues are expected to perform worse than the wider industry. The consensus price target held steady at US$61.06, with the latest estimates not enough to have an impact on their price targets.
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. At Simply Wall St, we have a full range of analyst estimates for Morgan Stanley going out to 2024, and you can see them free on our platform here..
Before you take the next step you should know about the 3 warning signs for Morgan Stanley (2 are potentially serious!) that we have uncovered.
This article by Simply Wall St is general in nature. 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.
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