What Will Morgan Stanley Stage In Its Earning On Friday

Final day of the week and final big dog of the wall street is to report their earnings on Friday. Yes, it is the Morgan Stanley with market cap of $38.8 billion which is the essential component of the financial sector providing services to corporation , governments , individuals and financial institutions around the globe. How Morgan Stanley has performed in its final quarter will widely depend on the followings fundamentals which will effect its earning’s stage tomorrow.


Cutting the Numbers
Morgan Stanley is committed to cut its cost by laying more and more of its employees and closing the part of the business where it does not see much of the future for growth. But will this average Joe’s running business strategy will result in strengthening its books is yet to confirm.

Recently, Morgan Stanley has announced its plan to reduce its work force in Asia by almost 15% and most of these job losses will take place in its investment banking division in Asia where M&A and global market division has underperformed as Bloomberg reported. Person with the familiar to matter has also confirmed that most of the job losses or savings will be made by terminating bank focus on real estate and investment banking division which is more tailored to china. It is important to note that this job cut announcement of another 15% workforce recently is on top of 4,000 job loss which took place last year.

However, one may think if this job cut by Morgan Stanley is actually a good move as world second biggest economy has already shown sign of bottoming out as per recent economic data released by country. Concerns do get deeper if we look at recent news where new IPO rumors shows the biggest search and commerce site based in china called Ali baba is going to do its IPO and MS was not even part of their selection in this process.

Talent might be moving
Morgan Stanley has also announced on Tuesday that they are deferring 100% bonuses for their employees who are earning more than $350,000 and bonus is greater than $50,000 till 2016. This will stop their traders taking over risky positions where losses will clawed back against their differed bonuses.

The concern is that money making employees may be start moving to their competitors and initial wave of this concern was confirmed when two broker teams who generated about $2.8million already moved to join rival firm Merrill Lynch and UBS. However, when it comes to job cuts in their wealth management business Morgan Stanley has not touched its wealth management business for now and all of their 16,800 financial advisors are still safe.

Settlements for Big Boys for their foreclosure abuses
Wall street journal reported recently that two big boys Morgan Stanley and Goldman Sachs have settled their allegation of foreclosure business at combined cost of $560 million with the Feds. In this agreement both of them will pay $232 will pay to eligible borrowers in terms of direct payments and remaining $325 million will be paid in the form of loan modifications and judgment forgiveness.

Morgan Stanley Earnings Preview
Morgan Stanley is expected to report profit of 29 cents per share on Friday which is much better as compared to the last year’s quarter where they reported loss of 14 cents. However this estimate has been slashed by analyst in last three months from 35 cents to 29 cents now.

Analyst Recommendations
To give some perspective in terms of analyst recommendations there are 6 Buys , 6 Outperform , 14 Hold , 1 Underperform and 2 Sell recommendations according to Reuters.

Portfolio Holdings
MS is owned by 398 portfolio and recent activity shows there are 6 buys and 0 sell according to Reuters .

Institutional Holdings
60.67% intuitions own MS stock and net effect of recent 3 month activity by institutions shows decrease -47,360 shares by institutions according to Reuters

Technical Analysis
MS is 4.69% up for the week, 13.80% up for the month , 19.00% up for the month , 25.09% up o yearly basis .

52 Weeks Range
12.18-20.99

Average True Range
0.51

Average Volume
20.39M

Beta
1.59

Support and Resistance
Support 1 16.40-15.93
Support 2 18.82-18.46

Resistance 1 21.30-20.83
Resistance 2 24.40-23.90

DISCLOSURE & DISCLAIMER: The Above Is For Informational Purposes Only And Not To Be Construed As Specific Trading Advice. Responsibility For Trade Decisions Is Solely With The Reader.

by Naeem Aslam