On Friday, Keefe, Bruyette & Woods raised the price target for Morgan Stanley (NYSE:MS) to $145 from $138, while keeping a Market Perform rating on the shares. The adjustment follows Morgan Stanley's strong quarterly performance, which analysts believe will extend into 2025, supported by robust pipelines across various uses and favorable conditions for trading activities.
Morgan Stanley's recent financial results surpassed expectations by $0.56, primarily driven by a significant performance in trading, especially within equities. The company maintains a solid financial foundation, earning a GOOD health score on InvestingPro, with impressive gross profit margins of 87%. While investment banking (IB) results aligned with predictions and Wealth Management Net Interest Income (NII) gains were counterbalanced by decreased Asset Management Fees (AUM fees), the firm anticipates the NII surplus to persist into 2025. This anticipation is based on improved deposit growth and increased client activity in secured based lending portfolios.
Despite the positive momentum, the company's management has decided to maintain its intermediate financial targets, which include a 20% Return on Tangible Common Equity (ROTCE). Keefe, Bruyette & Woods' stance remains at Market Perform due to the stock's current valuation, trading above three times the tangible book value (TBV), which suggests a cautious outlook on further stock appreciation.
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