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One of the most well-known global investment banks, Morgan Stanley MS, is generating considerable interest among investors. The company’s shares have rallied 32.4% this year.
Nonetheless, the stock is trading well below its peers — Goldman Sachs GS and JPMorgan JPM. It compares unfavorably with the industry while trading above the Zacks S&P 500 composite.
YTD Price Performance
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After a weak performance in the first half of 2024, Morgan Stanley shares gained traction as global mergers and acquisitions (M&A) witnessed a strong resurgence. In the first nine months of 2024, the company’s investment banking (IB) fees jumped 39% as clarity on several macroeconomic matters, the higher chances of the soft landing of the U.S. economy and interest rate cuts globally drove deal-making activities.
Deal-making activities will continue to soar in 2025 as a more lenient approach is expected, with Donald Trump winning the U.S. presidential election. This, along with a favorable interest rate environment, strong economic growth and a solid deal pipeline, set the stage for a revitalized IB business next year. MS is poised to remain at the forefront as capital markets activity experiences a notable recovery.
Against this backdrop, investors wonder if they should buy, hold or sell Morgan Stanley shares now.
Bullish Analyst Sentiments for MS
Analysts seem to be bullish about Morgan Stanley’s prospects. Over the past month, the Zacks Consensus Estimate for 2024 and 2025 earnings has moved upward.
Estimate Revision Trend
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This upward adjustment reflects a positive sentiment among analysts and suggests encouraging prospects. Further, over the long term, the company’s earnings are expected to grow 15.1%.
The Zacks Consensus Estimate for Morgan Stanley’s 2024 and 2025 earnings implies year-over-year growth of 34.8% and 7.6%, respectively.
Earnings Estimates
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Find the latest earnings estimates and surprises on Zacks Earnings Calendar.
Morgan Stanley Stock Looks Expensive
Given an impressive rally in MS shares, it appears slightly expensive relative to the industry. The stock is currently trading at the forward 12-month price/earnings (P/E) of 15.62X. This is above the industry’s 13.78X, reflecting a stretched valuation.
Price-to-Earnings F12M
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Further, MS stock is trading at a premium compared with GS and JPM. At present, GS and JPM are trading at a forward 12-month P/E of 13.19X and 14.15X, respectively.