Morgan Stanley reported quarterly earnings and revenue that beat analysts’ expectations on Tuesday. Here’s how the company did compared with what Wall Street expected:
- Earnings: $1.17 per share vs. $1.01 per share forecast by analysts polled by Refinitiv
- Revenue: $9.87 billion vs. $9.55 billion forecast by Refinitiv
Top banking analysts cut their earnings per share estimates on Morgan Stanley in the weeks leading up to third-quarter earnings, citing weaker than expected revenues in the bank’s institutional securities division.
RBC Capital Markets analyst Gerard Cassidy, for example, lowered his third-quarter EPS forecast to 99 cents last month on expectations for a decline in advisory fees and softer trading revenue.
“Institutional Securities tends to be a more volatile and unpredictable line of business for the company but the company continues to be a leading player in the Markets and Investment Banking businesses,” Cassidy said in a note last month. The bank’s equity division, the largest on Wall Street, delivered $2.5 billion in revenue in the second quarter, topping forecasts.
J.P. Morgan, often a bellwether for the rest of the nation’s largest banks, posted $2.84 billion in bond trading revenue, a 10 percent decline that missed analysts’ expectations for $2.96 billion. Shares of Morgan Stanley are down more than 17 percent so far this year.
Chief Executive Officer James Gorman has broadened Morgan Stanley’s wealth management division, a more reliable source of revenue than the traditionally volatile trading operations. The CEO has also revamped the bank’s fixed-income business, a strategic bet that helped the company eclipse rival Goldman Sachs in market capitalization earlier this year.
