Morgan Stanley Just Recorded A 10.0% EPS Beat: Here's What Analysts Are Forecasting Next

Morgan Stanley (NYSE:MS) just released its second-quarter report and things are looking bullish. The company beat expectations with revenues of US$15b arriving 4.9% ahead of forecasts. Statutory earnings per share (EPS) were US$1.82, 10.0% ahead of estimates. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Morgan Stanley

After the latest results, the 20 analysts covering Morgan Stanley are now predicting revenues of US$59.1b in 2024. If met, this would reflect a credible 5.3% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to ascend 15% to US$7.02. Before this earnings report, the analysts had been forecasting revenues of US$57.7b and earnings per share (EPS) of US$6.85 in 2024. 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.

Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$105, suggesting that the forecast performance does not have a long term impact on the company's valuation. 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$121 per share, while the most pessimistic values it at US$90.00. This is a very narrow spread of estimates, implying either that Morgan Stanley is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Morgan Stanley's rate of growth is expected to accelerate meaningfully, with the forecast 11% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 6.3% 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 5.5% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Morgan Stanley to grow faster than the wider industry.

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. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Morgan Stanley going out to 2026, and you can see them free on our platform here..

And what about risks? Every company has them, and we've spotted 2 warning signs for Morgan Stanley you should know about.

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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.

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