) is aiming at achieving a pre-tax profit margin ranging from
20-22% in its wealth management unit. Alongside, the company is
focused on restructuring its commodities business.
The company expects to achieve this target by 2015. It also
anticipates margins to increase to 23% or above, given the stock
prices and rise in interest rates over the upcoming years.
Previously, Morgan Stanley had set a pretax profit margin target
of 20%, owing to its plans to acquire
) Smith Barney brokerage business. However, it had a tussle with
Citigroup over the valuation of the brokerage business. This
resulted in a delay in the merger, which further elevated
Moreover, the sluggish economic growth and unfavorable market
conditions adversely affected the company. These factors prompted
Morgan Stanley to lower its pre-tax profit targets to the
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Morgan Stanley achieved pretax profit margin of 17% in the first
quarter of 2013 as well as in the fourth quarter of 2012. This
was higher than its targeted pretax profit margin of 15%.
Morgan Stanley's wealth management unit also reported solid
quarterly results in 2013, reflecting its strong financial
position. The wealth management unit's first-quarter 2013 pretax
income from continuing operations was $597 million, up 48.1% from
$403 million in the year-ago quarter. Moreover, first-quarter
2013 net revenue was $3.5 billion, improving 5.4% from $3.2
billion in the year-ago quarter, reflecting higher asset
At present, Morgan Stanley's wealth management unit has 16,284
financial advisers. Moreover, it has $1.79 trillion in client
assets as of Mar 31, 2013. Additionally, the wealth management
unit accounted for approximately half of the bank's net revenue
These positives are collectively expected to facilitate the
company's wealth management unit to achieve its targeted pre-tax
Additionally, Morgan Stanley plans to improve its commodities
business amid stringent regulations and slow cyclical period for
trading revenues. Moreover, the company targets to improve its
fixed-income business. It aims at achieving a 10% return on its
equity in the business.
Morgan Stanley currently carries a Zacks Rank #3 (Hold). Some
better performing stocks include
Investment Technology Group Inc
Ladenburg Thalmann Financial Services Inc
), which carry a Zacks Rank #1 (Strong Buy).