Pro dubs Morgan Stanley the ‘blue chip’ as Q3 results beat estimates

Morgan Stanley (NYSE: MS) shares are up 2.5% on Thursday morning as the investment bank said its financial performance was better than expected in the third quarter.

Sarat Sethi’s remarks on CNBC’s ‘Squawk Box’

On CNBC’s “Squawk Box”, DCLA’s Sarat Sethi, who also owns the stock, lauded Morgan Stanley for its strong quarterly performance and said:

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I think Morgan Stanley is now the blue-chip here. All of its segments did really well, and it doesn’t have the issues its peers might have in terms of credit. The management has done a great job, and I think over time this bank re-rates, they doubled their dividend this year, and I look for even better things for them in the future.

The report comes weeks after Mike Mayo downgraded Morgan Stanley to “neutral”.

Q3 financial performance

According to Refinitiv, experts had forecast the Wall Street bank to post $1.68 of adjusted per-share earnings on $14 billion in revenue. Morgan Stanley, however, beat both estimates posting $1.98 of adjusted EPS on $14.75 billion in revenue.

Thanks to the recent E-Trade and Eaton Vance acquisitions, net income and revenue jumped over 25% on a year-over-year basis. M&A activity resulted in $1.3 billion of advisory revenue for Morgan Stanley in Q3 – a 256% increase from last year.

Revenue from individual business segments

Morgan Stanley’s investment banking franchise noted an annualised growth of 67% in the recent quarter. Equities trading revenue was up 24%, and the wealth management division grew 28%. Fixed-income revenue, however, tanked 16% to register at $1.64 billion.

All segments except wealth management topped estimates, as per the earnings press release.

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