Morgan Stanley
will report fourth-quarter earnings and present its strategy outlook on Tuesday, the first time it will do so under new CEO Ted Pick.
Analysts’ consensus is for earnings per share of $1.07, down from $1.31 for the same period a year earlier, according to Factset. For all of 2023, analysts forecast EPS of $5.47, down from $6.36 in 2022.
The stock, now trading at around $90.00, fell in October after the company reported disappointing third-quarter results, as investment banking revenue slumped 27% year over year. Investors will be watching that unit’s performance closely in the fourth-quarter report.Â
To be sure, Morgan Stanley isn’t alone. The investment banking sector has faced headwinds in part because of a slowdown in dealmaking. Tuesday’s report might indicate whether the slump is behind the company.
Pick, who had been head of Morgan Stanley’s institutional securities business, became CEO following the retirement of James Gorman at the start of the year. He inherited a very different company than the one Gorman took on in 2010. Gorman shifted the business mix in favor of wealth management.
One wealth management metric to watch: net new assets. During the third quarter, Morgan Stanley’s wealth unit reported $36 billion in net new assets, well below the $65 billion the unit raked during the same period in 2022. At the time, Gorman chalked it up to idiosyncratic factors. Investors may want to see signs the dip was a one-off and that Morgan Stanley is still on track to hit its goal of $10 trillion in assets in the next decade. The wealth management unit had $4.8 trillion at the end of the third quarter. Morgan Stanley is one of the nation’s largest wealth managers, with well over 10,000 advisors, a robo-advisor, and a huge online brokerage in E*Trade.
The company’s earnings call may provide insights into how retail investors are positioning their portfolios. During the third quarter, Morgan Stanley said its retail investors had 23% of their assets in cash. That’s 5% higher than normal. The potential for Federal Reserve rate cuts this year could prompt some clients to move money out of cash and cash equivalents into other assets.Â
Beyond the numbers, investors will also look for updates on Morgan Stanley’s strategy within wealth management. The company has said it has an opportunity to build more connections between its workplace business and wealth management operations, potentially creating a pipeline of future wealth clients.
Write to Andrew Welsch at [email protected]
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