Morgan Stanley (NYSE:MS)'s third quarter profit is expected to have declined year-over-year on another quarter of sluggish dealmaking.
Wall Street expects the investment banking firm to report earnings per share (EPS) of $1.27 when it hands down its 3Q financial results before the opening bell in New York on Wednesday, October 18, 2023.
This represents a 17% drop from the year-ago quarter when it posted adjusted EPS of $1.53.
Morgan Stanley (NYSE:MS)'s investment banking income is expected to decline by 2.8% to $1.24 billion, according to Zacks Investment Research.
However, revenue is expected to increase modestly, up 0.7% from $12.99 billion to $13.08 billion.
Bank of America (BoA) analysts expect Morgan Stanely to report EPS of $1.28 for the third quarter.
They note that investors are laser-focused on Morgan Stanley (NYSE:MS)’s return on average tangible common shareholders’ equity (ROTCE) defensibility, targeting 20% plus, given the rising regulatory burden and headwinds from a “higher for longer” rate backdrop.
The company’s CEO transition will also be a factor, they believe, as investors evaluate potential risks following chief James Gorman’s retirement.
“Premium valuation and the resiliency of the business model will be put to test over the coming quarters,” they wrote.
Shares of Morgan Stanley traded up 1.3% at US$78.82 on Monday afternoon.
Contact the author at emily.jarvie@proactiveinvestors.com
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