Will the Fed’s recent approval of Morgan Stanley’s $3.1 billion buy back proposal and a boost in quarterly dividends have a positive impact on the company’s stock price? Here’s what analysts say.
On Monday, Morgan Stanley (NYSE: MS) will report first quarter earnings before the market opens. According to a poll of Thomson Reuters’ analysts, expectations are that Morgan Stanley will show profits of 78 cents a share which is up from the 74 cents a share reported a year ago. The company has not provided a forecast for its first quarter results. Also, expectations are for earnings of $2.90 per share for the fiscal year. Some analysts forecast that Morgan Stanley will report $9.17 billion in revenue, predicting an increase from $8.93 billion reported last year.
Interestingly, James Gorman who is the chief executive and chairman of Morgan Stanley has vowed to increase the company’s return on equity, which is a key measure of the profitability of banks. Gorman had stated that he would raise the return on equity to at least 10 percent while being quite elusive regarding his plans. While it’s proven to be quite a lot harder to pin this increase down, Gorman has been getting closer though and produced an 8% return in 2014. Investors are eagerly hoping that the 10% mark is achieved in 2015.
Wall Street has seen a profitability vacuum with new rules on risk taking and bank capital which has impacted leading banks like Morgan Stanley to withdraw from some of its trading businesses. The strategy has seemed perceptive in recent years with a decline in client activity. However, markets gained in the first-quarter and competitors like J.P. Morgan Chase & Co. and Goldman Sachs Group Inc. were rewarded for their perseverance. Investors have now turned their attention to see how the reformed Morgan Stanley business has performed.
MT4 Chart: Morgan Stanley
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