Morgan Stanley Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

Morgan Stanley (NYSE:MS) defied analyst predictions to release its quarterly results, which were ahead of market expectations. The company beat forecasts, with revenue of US$18b, some 9.3% above estimates, and statutory earnings per share (EPS) coming in at US$2.80, 33% ahead of expectations. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

Taking into account the latest results, the consensus forecast from Morgan Stanley's 17 analysts is for revenues of US$72.9b in 2026. This reflects an okay 6.3% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to increase 5.2% to US$10.29. Before this earnings report, the analysts had been forecasting revenues of US$71.4b and earnings per share (EPS) of US$9.85 in 2026. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.

Check out our latest analysis for Morgan Stanley

With these upgrades, we're not surprised to see that the analysts have lifted their price target 5.9% to US$164per share. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Morgan Stanley analyst has a price target of US$186 per share, while the most pessimistic values it at US$122. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Morgan Stanley shareholders.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Morgan Stanley's rate of growth is expected to accelerate meaningfully, with the forecast 5.0% annualised revenue growth to the end of 2026 noticeably faster than its historical growth of 4.2% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 6.8% per year. So it's clear that despite the acceleration in growth, Morgan Stanley is expected to grow meaningfully slower than the industry average.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Morgan Stanley's earnings potential next year. Fortunately, they also upgraded their revenue estimates, although our data indicates it is expected to perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Morgan Stanley analysts - going out to 2027, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 1 warning sign for Morgan Stanley that you need to be mindful of.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.