The Inside Scoop on Morgan Stanley’s Q1 Performance and Its Implications for Traders

Morgan Stanley (MS) joined other investment banking companies in reporting a lackluster first quarter – one that saw a decline in revenue and profit figures. The company fell victim to a steep drop-off in investment banking revenue, as deals dried up amidst a challenging economic environment.

Revenue for the quarter fell 2% from this time last year to just $14.52 billion. But what’s more concerning is the 19% drop in profitability year over year – resulting in a profit of just $2.98 billion.

Now, Morgan Stanley isn’t alone. Rivals Holdman Sachs and other investment banks experienced similar losses. Experts point to a few reasons for this – investors sat on the sidelines as a result of sky-high interest rates, the SVB run created fear of banks, and the ongoing war in Ukraine.

The one bright spot for the company last quarter was the wealth management division – which brought in fresh assets and experienced a nice bump in net interest income. Other than that, though, it’s safe to say that Morgan Stanley is ready to put that performance in the rearview mirror and work towards a better 2nd quarter.

And, CEO James Gorman isn’t too frantic about this performance. He says that the firm is prepared to end the year on a positive note despite the challenges banks are up against.

But – those invested in Morgan Stanley (or considering adding the stock to their portfolio) need to know what this underwhelming earnings report means for them. We can help you tune out the noise and get into what matters most for this stock. Below, you’ll gain clarity, actionable insights through the VectorVest stock analyzer software.

MS Still Has Fair Upside Potential and Timing With Good Safety to Back it Up

The VectorVest system simplifies your trading strategy by telling you everything you need to know in 3 simple ratings. These are relative value (RV), relative safety (RS), and relative timing (RT). Each of these sits on a scale of 0.00-2.00, with 1.00 being the average.

By picking stocks with appreciating ratings above the average, you can win more trades with less work. Better yet, VectorVest is able to give you a clear buy, sell, or hold recommendation based on these ratings for any given stock at any given time. As for MS, here’s what you need to know…

• Fair Upside Potential:  In looking at the long-term price appreciation potential for MS compared to AAA corporate bond rates and risk, there is reason to be optimistic. Right now, the RV rating of 0.97 is just below the average - but considered fair nonetheless. With that said, the stock is overvalued - with a current value of just $68.48 compared to a current price of $89.18.
• Good Safety: The RS rating is an indicator of risk, and takes into account the company’s financial consistency & predictability, debt-to-equity ratio, and business longevity. And as it currently stands, MS has good safety with an RS rating of 1.13.
• Fair Timing:  Before this news, MS was climbing in the right direction - with a 4% gain in the last week. A positive price trend was in the midst of forming, and the fair RT rating of 0.96 is just below the average. This is based on the direction, dynamics, and magnitude of the stock’s price movement - and is taken day over day, week over week, quarter over quarter, and year over year.

All things considered, the overall VST rating of 1.03 is just above the average and considered to be fair. So what does that mean for you as an investor - should you buy more MS stock or offload shares? Or, should you wait to see how the market reacts to this news in the coming days and weeks before making a move?

Don’t play the guessing game or let emotion influence your decision-making. Get a clear answer on what you should do with MS through a free stock analysis today.

Want These Types of Insights at Your Fingertips so You Can Win More Trades?

Use VectorVest to analyze any stock free. VectorVest is the only stock analysis tool and portfolio management system that analyzes, ranks and graphs over 18,000 stocks each day for value, safety, and timing and gives a clear buy, sell or hold rating on every stock, every day.

VectorVest advocates buying safe, undervalued stocks, rising in price. And right now, MS has fair upside potential and timing, with good safety behind the stock. While the 1st quarter was certainly not what investors and the company itself were hoping for, it’s not time to hit the panic button just yet. 

Before you invest, check VectorVest! Click here to ANALYZE ANY STOCK FREE and see our system in action!