On Jun 26, 2013, we reaffirmed our long-term recommendation
) at Neutral. The reiteration was based on regulatory approvals
that the company received for acquiring the remaining interest
in MSWM JV. Nevertheless, Morgan Stanley continues to face
persistently high operating expenses.
In Jun 2013, Morgan Stanley received all regulatory
approvals to purchase the remaining 35% stake in Morgan Stanley
Wealth Management (MSWM) - its wealth management joint venture
). Once the company fully controls the JV, it will get one of
the largest retail platforms, thereby lowering its dependence
on volatile trading revenues. Moreover, the additional free
capital will likely be deployed to enhance shareholder
Further, Morgan Stanley's adjusted earnings from continuing
operations beat the Zacks Consensus Estimate.
Better-than-expected results were mainly driven by declining
operating expenses, partially offset by a decrease in
Further, estimates over the past 90 days have been
increasing, with the Zacks Consensus Estimate for 2013 moving
up by a penny to $2.13 per share. Moreover, for 2014, the Zacks
Consensus Estimate increased 1.7% to $2.60 over the same time
frame. Morgan Stanley currently carries a Zacks Rank #3
Though the company's operating expenses fell in the first
quarter, we anticipate them to remain high in the near term, as
restructuring initiatives announced will likely take time to
benefit the financials. Further, these initiatives are not
expected to fully control costs as the company continues to
invest in franchise.
Other Banks Worth Considering
Some better performing banks include
JPMorgan Chase & Co.
), both of which carry a Zacks Rank #2 (Buy).
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MORGAN STANLEY (MS): Free Stock Analysis
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