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Morgan Stanley, least-worst in trading, could see 10% upside, analyst says

19 July 2017, 08:18 | Lionel James

Morgan Stanley has completed the second quarter US bank reporting session

Morgan Stanley Reports Q2 Earnings More Than Double From Year Before

Wall Street opened higher on Wednesday, lifted by a rise in housing construction, a report of merger talks in the media business and strong quarterly earnings from Morgan Stanley.

Analysts had expected EPS of 76 cents on revenue of $9.09 billion. Bond trading revenue saw an uptick toward the end of the quarter, a move indicative of the bank's upcoming business, Pruzan said. Sales and Trading net revenues fell 3%.

Morgan Stanley's cap a generally strong showing from its peers. Sales and trading revenue ticked lower to $3.2 billion from $3.3 billion previous year.

"Our second quarter results demonstrated the resilience of our franchise in a subdued trading environment", CEO and chairman James Gorman said in a statement.

But slowing banking business might not just be part of Wall Street's summer slump.

However, the bank generally fared better than others.

Institutional Securities revenues rose 4.3% from the year-ago period, while Investment Banking revenues surged 27%.

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In contrast, Goldman Sachs reported fixed income, currency and commodities trading revenue dropped 40 percent from the second quarter of 2016.

Investment Management had revenues of $665 million. That's still below the long-term goal of Morgan's management for a return-on-equity of above 10 percent, however.

Its revenue rose 7 percent to US$9.5 billion, compared with an average estimate of US$9.1 billion.

On the downside, tech giant (http://www.marketwatch.com/story/ibm-continues-to-promise-a-rosy-future-while-reporting-a-stagnant-present-2017-07-18) IBM (IBM) fell 3.6% after its results, weighing on the Dow.

Morgan Stanley and Goldman Sachs have always been fierce rivals in many businesses, but it has been rare for Morgan Stanley to beat Goldman in trading or be broadly more profitable.

Shares of Morgan Stanley closed Tuesday at $45.14, with a consensus analyst price target of $48.78 and a 52-week range of $27.79 to $47.33.



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