Morgan Stanley (MS) – Exploring Valuation After Strong Year-to-Date Returns

Morgan Stanley (MS) stock has been relatively steady this week, despite small moves over the past month and healthy long-term returns. Investors may be watching for fresh catalysts or changes in market sentiment.

See our latest analysis for Morgan Stanley.

Morgan Stanley’s share price has climbed an impressive 27% year-to-date, signaling sustained optimism. Its 1-year total shareholder return of almost 21% highlights its long-term momentum. Recent dips have not derailed its strong multi-year uptrend or changed the broader valuation narrative.

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With shares trading near recent highs, the question now is whether Morgan Stanley’s fundamentals still offer meaningful upside, or if the market has already baked in all the future growth. Could there be more room to run?

Most Popular Narrative: 5.6% Undervalued

Compared to the last close price, the most widely watched narrative suggests Morgan Stanley’s fair value sits above its current level. The narrative reflects consensus on future profitability and margin improvements, which support a slightly higher price target.

The ongoing increase in global wealth, combined with the accelerating intergenerational transfer of assets, is boosting demand for comprehensive advisory and wealth management solutions. This is evidenced by record net new assets and a growing client base, which should drive higher recurring fee-based revenue and long-term earnings growth.

Read the complete narrative.

Want to know what drives this premium? One game-changing assumption hides inside the fair value math. Curious how big growth in a core business and aggressive margin targets set this price apart? See why cautious consensus may still be missing the upside in the full narrative.

Result: Fair Value of $168.15 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent regulatory pressures and the growing popularity of low-fee investment products could limit Morgan Stanley's margin growth and challenge bullish long-term expectations.

Find out about the key risks to this Morgan Stanley narrative.

Another View: What Does the SWS DCF Model Reveal?

While most market watchers see Morgan Stanley as undervalued based on price targets, our SWS DCF model suggests otherwise. According to this approach, the current share price sits above the calculated fair value of $136.54. This implies potential downside if market optimism falters. Is the market right to look beyond the DCF warning?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Morgan Stanley for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 919 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Morgan Stanley Narrative

If this perspective doesn't quite fit your view or you want to check the numbers yourself, it's easy to build a custom narrative in just a few minutes with Do it your way.

A great starting point for your Morgan Stanley research is our analysis highlighting 4 key rewards and 2 important warning signs that could impact your investment decision.

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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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