Why Is Morgan Stanley (MS) Up 3.9% Since Last Earnings Report?

A month has gone by since the last earnings report for Morgan Stanley (MS). Shares have added about 3.9% in that time frame, underperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is Morgan Stanley due for a pullback? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent catalysts for Morgan Stanley before we dive into how investors and analysts have reacted as of late.Morgan Stanley Q1 Earnings Beat Estimates on Markets & Advisory StrengthMorgan Stanley’s first-quarter 2026 earnings were $3.43 per share, which outpaced the Zacks Consensus Estimate of $3.06. The bottom line jumped 32% from the prior-year quarter. Results benefited from robust client engagement and strength in IB and trading activities. Advisory revenues surged 74% year over year to $978 million as completed M&A transactions increased, particularly in the Americas. Equity underwriting revenues climbed 24% to $396 million on higher IPO and convertible offerings, while fixed income underwriting revenues rose 10% to $742 million, supported by higher investment-grade issuances tied to event-related activity. Total investment banking revenues in the Institutional Securities division soared 36% to $2.12 billion.Similarly, MS posted a strong trading performance. Equity revenues climbed 25% year over year to a record $5.15 billion, while fixed-income revenues jumped 29% to $3.36 billion, driven by strong client activity and volatility in energy markets.The performance of the company’s wealth management business was impressive, driven by higher asset management revenues and robust levels of client activity. This, along with higher net interest income (NII), supported Morgan Stanley’s quarterly performance.Net income applicable to Morgan Stanley was $5.57 billion, rising 29% year over year.Revenues Rise, Expenses UpQuarterly net revenues were a record $20.58 billion, growing 16% from the prior-year quarter. The top line beat the consensus estimate of $19.85 billion.Total non-interest revenues were $17.88 billion, up 16% year over year, while NII was $2.70 billion, up 15%.Total non-interest expenses were $13.47 billion, up 12%. Of this, compensation and benefits expenses rose 14% to $8.54 billion, while non-compensation expenses increased 9% to $4.93 billion.Provision for credit losses was $98 million compared with $135 million in the prior-year quarter.Segmental Quarterly PerformanceInstitutional Securities: Pre-tax income was $4.16 billion, up 27% from the prior-year quarter. Net revenues were a record $10.72 billion, rising 19% year over year. The upside resulted from higher IB revenues, record equity revenues and stronger fixed-income performance, partially offset by lower other revenues.Wealth Management: Pre-tax income totaled $2.59 billion, surging 33% year over year. Net revenues were a record $8.52 billion, up 16%, driven by higher asset management revenues, transactional revenues and NII.Total client assets were $7.35 trillion as of March 31, 2026, up 22% year over year. Fee-based client assets were $2.79 trillion, up 19%, while U.S. Bank loans rose 15% to $186.3 billion, and deposits increased 12% to $419 billion.Investment Management: Pre-tax income was $280 million, down 13% from the year-ago quarter. Net revenues were $1.54 billion, declining 4%. The fall reflected lower performance-based income and other revenues, partially offset by higher asset management and related fees.As of March 31, 2026, total assets under management or supervision were $1.87 trillion, up 13% year over year. Long-term net flows were $3.3 billion in the quarter.Solid Capital PositionAs of March 31, 2026, book value per share was $66.18, up from $60.41 in the corresponding period of 2025. The tangible book value per share was $51.58, up from $46.08 as of March 31, 2025. Morgan Stanley’s Tier 1 capital ratio (advanced approach) was 17.9% compared with 17.7% in the prior-year quarter.Update on Share Buyback PlanIn the reported quarter, Morgan Stanley repurchased 10 million shares for $1.75 billion.2026 OutlookThe company expects a modest sequential gain in the WM segment’s NII for the second quarter. Also, given the incremental loan growth expectation and deposit mix, NII is projected to continue to trend higher.It anticipates the effective tax rate to be 22-23%.How Have Estimates Been Moving Since Then?Since the earnings release, investors have witnessed a upward trend in estimates review.VGM ScoresCurrently, Morgan Stanley has a average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock has a score of D on the value side, putting it in the bottom 40% for this investment strategy.Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Morgan Stanley has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.Beyond Nvidia: AI's Second Wave Is HereThe AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.See Stocks Now >>This article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks