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- Price
- $187.10
- Discount category
- Close to intrinsic value
- Next earnings
- 2027-01-15
- Next earnings is estimate
- Yes
- Company name
- Morgan Stanley
- Sector
- Investment banking and wealth management
- About
- Morgan Stanley is a global financial services firm with three business segments. Institutional Securities gives advisory, underwriting, sales and trading, and lending services to companies, governments and investors. Wealth Management serves individuals and small businesses through financial advisors, the E*TRADE platform and workplace plans. Investment Management manages funds for institutions and individuals. Client assets in Wealth Management and Investment Management were $10.5 trillion at September 30, 2026. Net revenues were a record $70.6 billion in 2025 and $20.3 billion in Q3 2026. Total assets were $1.69 trillion at September 30, 2026.
- Thesis
- The market doubts that Morgan Stanley can keep returns above its 20% goal when markets are less active. Return on tangible common equity was 21.6% in 2025, 27.1% in Q1 2026, 26.6% in Q2 2026 and 22.6% in Q3 2026. Equity revenue grew 41% in Q3 2026. Just over half of the $232 billion of Wealth Management net new assets in Q3 2026 came from clients linked to IPOs. Investors fear that these strong markets do not last. Trading and deal fees can fall, and Investment Management results move with carried interest, which reversed in Q3 2026. For the gap to close, three things must be true. Wealth Management must keep its pre-tax margin near 30% and keep adding fee-based assets when markets fall. Return on tangible common equity must stay at or above the 20% goal over a full year with normal trading. The firm must put its excess capital to use through the $20 billion buyback program and the higher dividend. The Q4 2026 report, expected in mid-January 2027, gives the first test. The stress test results, expected in June 2027, set the stress capital buffer from October 1, 2027 and give a second test. If returns stay near the goal through 2027, the gap can close within about one year.
- Risks
- Revenue depends on markets. Trading, underwriting and advisory fees fall when markets are weak, and Wealth Management fees move with the value of client assets. Just over half of the Wealth Management net new assets in Q3 2026 came from clients linked to IPOs. These flows can fall when IPO activity slows, and such assets are often concentrated in one stock. Capital rules can limit buybacks. The CET1 requirement was 11.8% at September 30, 2026, including a stress capital buffer of 4.3%, and the Federal Reserve sets a new buffer each year after the stress test. Expenses grow with revenue because of pay. If revenue falls, the efficiency ratio can rise above the 70% goal and returns can fall. Investment Management results move with carried interest and investment gains, which reversed in Q3 2026.
- Balance sheet
- Morgan Stanley funds itself with deposits, borrowings and equity. At September 30, 2026, total assets were $1,692 billion, deposits were $478 billion and borrowings were $389 billion, of which $29.4 billion was due within 12 months. Liquidity resources were $440 billion. The standardized CET1 ratio was 14.9%, above the requirement of 11.8%, which includes a stress capital buffer of 4.3% and a G-SIB surcharge of 3.0%. The Tier 1 leverage ratio was 5.9% and the supplementary leverage ratio was 4.8%. Book value per share was $68.59 and tangible book value per share was $53.96. Moody's rates the parent company A1, S&P rates it A- and Fitch rates it A+, all with a stable outlook. For a bank, net debt is not a useful measure, so this profile does not show debt figures. As of 2026-09-30.
- Checkpoints
- Jan 15, 2027 (estimate): Q4 2026 results: returns and wealth flows. Pending. Watch: Return on tangible common equity at or above 20% and a Wealth Management pre-tax margin near 30% pass; lower returns as trading and deal fees fall fail. Jun 2027 (estimate): 2027 stress test and new stress capital buffer. Pending. Watch: A stress capital buffer at or below the current 4.3% from October 1, 2027 passes; a higher buffer that cuts buybacks fails.
- Recent events
- 2026-10-14: Morgan Stanley reported Q3 2026 results. Net revenues were $20.3 billion, up from $18.2 billion a year earlier, and EPS was $3.03, up from $2.80. Return on tangible common equity was 22.6%. Equity revenue grew 41% to $5.8 billion, and fixed income revenue fell 7%. Wealth Management had record net revenues of $9.1 billion, a pre-tax margin of 30.4% and net new assets of $232 billion. The firm bought back $1.5 billion of stock. 2026-07-15: Morgan Stanley reported Q2 2026 results. Net revenues were $21.3 billion, EPS was a record $3.46 and return on tangible common equity was 26.6%. 2026-06-24: After the 2026 stress test, Morgan Stanley said that it intends to raise the quarterly dividend to $1.15 from $1.00 per share, and the board approved a new multi-year share buyback program of up to $20 billion. Its stress capital buffer stays at 4.3% until October 1, 2027. 2026-04-15: Morgan Stanley reported Q1 2026 results. Net revenues were $20.6 billion, EPS was $3.43 and return on tangible common equity was 27.1%. The results included $178 million of severance costs for job cuts of about 2% of staff in March 2026. 2026-01-15: Morgan Stanley reported 2025 results. Net revenues were a record $70.6 billion, EPS was $10.21 and return on tangible common equity was 21.6%. The firm kept its goals of a 20% return on tangible common equity, a 70% efficiency ratio, a 30% Wealth Management pre-tax margin and more than $10 trillion of client assets.