Morgan Stanley on Tuesday morning reported an adjusted earnings-per-share beat. But as we saw with Wells Fargo on Friday, EPS had initially looked like a miss. That, coupled with Morgan Stanley’s new CEO expressing macro caution, set the tone for a tough session for the stock. Revenue for the three months ended Dec. 30 increased 1% year-over-year to $12.9 billion, outpacing expectations of $12.75 billion, according to the consensus estimate compiled by Bloomberg. Earnings-per-share fell 10% on an annual basis to $1.13, exceeding the $1.01 expected. EPS numbers from the major financial institutions have been messy this quarter as analysts account for a Federal Deposit Insurance Corporation (FDIC) special assessment imposed on big banks to pay for the rescue of regional banks after last year’s failure of Silicon Valley Bank. Morgan Stanley’s EPS of $1.13 excludes the one-time FDIC payment and other one-time legal charges taken in Q4. MS 1Y mountain Morgan Stanley 1 year Shares of Morgan Stanley were on a five-session losing streak with Tuesday’s post-earnings 5% decline. However, Morgan Stanley — and for that matter, Wells Fargo — saw their stocks surge into the end of 2023. We had been cautioning members that banks may have been coming into the quarterly prints too hot. Not helping matters, on his first post-earnings conference call as CEO, Ted Pick said he sees two possible headwinds ahead: “The first is geopolitical, that global conflicts intensify and the second is the state of the U.S. economy over the course of 2024.” Bottom line Morgan Stanley’s fourth quarter was largely better than expected, with topline strength resulting from revenue beats in all three primary operating segments. We’re especially pleased to see the bounce back in Wealth Management and Investment Banking — the former, in particular, as poor performance in the third quarter weighed heavily on shares. It’s important to consider quarterly EPS excluding these one-time charges because…
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