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Morgan Stanley (MS)
NYSE:MS
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Morgan Stanley
(NYSE:MS)
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Rating:69Neutral
Price Target:
$191.00
▲(8.89% Upside)
Action:DowngradedDate:02/20/26
The score is driven primarily by mixed fundamentals: strong revenue/profitability momentum is offset by highly volatile/mostly negative operating and free cash flow and leverage sensitivity. The earnings call adds support via strong execution, capital strength, and shareholder returns, while technicals are mildly bearish near-term and valuation is reasonable with a supportive dividend yield.
Positive Factors
Wealth Management scale, fee-based flows and margin expansion
Large, recurring fee pools and sustained net new asset inflows underpin durable earnings. $356B of net new assets and $160B fee flows indicate advisor-led distribution and client stickiness, supporting predictable fee revenue and margin resilience across market cycles.
Institutional Securities market-share gains and investment banking momentum
Market-share gains in equities and a robust investment banking pipeline signal durable competitive positioning. Diversified wallet-share across underwriting, markets and advisory creates multiple structural revenue channels that benefit from long-duration client relationships.
Strong capital base and disciplined shareholder returns
A healthy CET1 buffer plus active buybacks and dividend increases show both shock-absorbing capital and disciplined allocation. This balance supports regulatory resilience, enables opportunistic buybacks and funds investments without large capital-raising needs.
Negative Factors
Volatile and often negative operating and free cash flow
Chronic cash conversion weakness reduces financial flexibility and raises dependency on non-cash accruals for reported earnings. Repeated negative operating and free cash flows constrain capacity to sustainably fund buybacks, repay debt or invest without reliance on capital markets.
Elevated leverage and inconsistency in reported debt metrics
High leverage ratios amplify risk in stressed markets and increase sensitivity to funding and credit cycles. Inconsistent 2025 debt reporting raises concerns about trend reliability and complicates assessments of true balance-sheet flexibility during downturns.
Performance and mark-to-market volatility in Investment Management
Reliance on performance-linked fees and exposure to mark-to-market swings creates lumpy revenue and earnings volatility. Asset markdowns can depress fee recognition and client sentiment, making investment-management revenue less predictable across market cycles.
Morgan Stanley (MS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$280.66B
Dividend Yield2.14%
Average Volume (3M)7.68M
Price to Earnings (P/E)17.3
Beta (1Y)1.48
Revenue Growth7.22%
EPS Growth48.18%
CountryUS
Employees81,000
SectorFinancial
Sector Strength70
IndustryFinancial - Capital Markets
Share Statistics
EPS (TTM)2.68
Shares Outstanding1,589,309,300
10 Day Avg. Volume7,511,062
30 Day Avg. Volume7,682,779
Financial Highlights & Ratios
PEG Ratio0.58
Price to Book (P/B)2.50
Price to Sales (P/S)2.40
P/FCF Ratio-15.59
Enterprise Value/Market Cap0.60
Enterprise Value/Revenue1.44
Enterprise Value/Gross Profit2.50
Enterprise Value/Ebitda6.29
Forecast
1Y Price Target
$185.17Price Target Upside5.56% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering13
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Morgan Stanley Business Overview & Revenue Model
Company DescriptionMorgan Stanley, a financial holding company, provides various financial products and services to corporations, governments, financial institutions, and individuals in the Americas, Europe, the Middle East, Africa, and Asia. It operates through Institutional Securities, Wealth Management, and Investment Management segments. The Institutional Securities segment offers capital raising and financial advisory services, including services related to the underwriting of debt, equity, and other securities, as well as advice on mergers and acquisitions, restructurings, real estate, and project finance. This segment also provides sales and trading services, such as sales, financing, prime brokerage, and market-making services in equity and fixed income products consisting of foreign exchange and commodities; corporate and commercial real estate loans, which provides secured lending facilities and financing for sales and trading customers, and asset-backed and mortgage lending; and wealth management services, investment, and research services. The Wealth Management segment offers financial advisor-led brokerage and investment advisory services; self-directed brokerage services; financial and wealth planning services; workplace services, including stock plan administration; annuity and insurance products; securities-based lending, residential real estate loans, and other lending products; banking; and retirement plan services to individual investors and small to medium-sized businesses and institutions. The Investment Management segment provides equity, fixed income, liquidity, and alternative/other products to benefit/defined contribution plans, foundations, endowments, government entities, sovereign wealth funds, insurance companies, and third-party fund sponsors and corporations through institutional and intermediary channels. Morgan Stanley was founded in 1924 and is headquartered in New York, New York.
How the Company Makes MoneyMorgan Stanley generates revenue through multiple streams. The Institutional Securities segment earns income from investment banking activities, which include advisory services for mergers and acquisitions, underwriting of equity and debt securities, and capital raising services. This segment also profits from trading and sales of securities, commodities, and foreign exchange. The Wealth Management segment contributes significantly through fees earned from advisory services, asset management, and brokerage services provided to individual investors and institutions. Additionally, the Investment Management segment generates revenue from managing investment funds and private equity investments, earning management fees and performance-based fees. Strategic partnerships with other financial institutions and technology firms also enhance its service offerings and revenue potential, while market conditions and client demand play critical roles in its overall earnings.
Morgan Stanley Key Performance Indicators (KPIs)
Any
Net Income Breakdown
Provides a detailed view of profit sources, illustrating how different operations contribute to the bottom line and financial health.
Provides a detailed view of profit sources, illustrating how different operations contribute to the bottom line and financial health.
Data provided by:
The Fly
The FlyMorgan Stanley Earnings Call Summary
Earnings Call Date:Jan 15, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 15, 2026
Earnings Call Sentiment Positive
The call conveyed strong, broad-based execution: record revenues and EPS, meaningful asset and flow growth in wealth and investment management, market share gains in institutional securities, a robust capital position (15% CET1 and >300 bps excess), and ongoing investment in AI, technology and strategic initiatives. Near-term challenges were acknowledged—DCP accounting transition and transitional costs, softer pockets in fixed income and commodities, mark-to-market volatility in some investment management strategies, and macro/regulatory uncertainties—but these were framed as manageable within the firm’s capital and operating plans. On balance the positive operational and financial momentum substantially outweighed the listed headwinds.Q4-2025 Updates
Positive Updates
Record Revenue and Earnings
Full-year revenues reached a record $70.6 billion and fourth-quarter revenues were $17.9 billion. Full-year EPS was $10.21 and Q4 EPS was $2.68. ROTCE was 21.6% for the year and 21.8% in the quarter. The firm delivered operating leverage while investing for growth, with the full-year efficiency ratio improving to 68.4%.
Wealth Management Scale, Flows and Margin Expansion
Wealth delivered record full-year revenues (~$31.8–$32.0 billion) and a 29% reported margin for 2025; Q4 revenues were $8.4 billion with a 31.4% reported margin (DCP headwind noted). Net new assets were $356 billion for the year, fee-based flows were $160 billion (with fee-based flows >$40 billion for three consecutive quarters), and advisor-led assets from workplace/E*TRADE totaled a record $99 billion (vs. ~$60B historical annual average). Bank lending balances grew $7 billion sequentially to $181 billion; total period deposits were $408 billion and net interest income was $2.1 billion in Q4.
Institutional Securities and Investment Banking Momentum
Institutional Securities had record full-year revenues of $33.1 billion and Q4 revenues of $7.9 billion. Investment banking revenues were $7.6 billion for the year and Q4 investment banking revenues rose 47% year-over-year to $2.4 billion. Equity revenues were a record $15.6 billion for the year, driven by share gains, prime brokerage growth and increased client engagement; fixed income generated $8.7 billion for the year, and the firm reports durable wallet-share gains across underwriting and markets.
Investment Management AUM Growth and Positive Flows
Investment Management reported total revenues of $6.5 billion, record AUM of $1.9 trillion, and full-year long-term net inflows of $34 billion. The business generated six consecutive quarters of positive long-term net flows; long-term net inflows were ~$2 billion in Q4. Parametric scaled to $685 billion AUM and alternatives grew to $270 billion (more than doubled in five years).
Strong Capital Position and Shareholder Returns
Standardized CET1 ratio ended the year at 15% with over 300 basis points of excess capital. The firm returned capital via $4.6 billion of common stock buybacks in 2025 (including $1.5 billion in Q4) and raised its quarterly dividend (incrementally over four years) to $1.00 per share. Management emphasized disciplined capital allocation (dividends, opportunistic buybacks, and investments) and expects to remain patient on M&A.
International and Strategic Growth
25% of revenues came from outside the U.S.; EMEA revenues grew ~40% and Asia revenues grew ~50% over the last two years. The firm highlighted global footprint (30,000 employees outside the U.S.), strategic acquisitions and partnerships (EquityZen, Carta, Zero Hash) and ongoing investment in AI and technology to drive future efficiency and revenue opportunities.
Negative Updates
DCP Accounting Impact and Transition Costs
Deferred compensation plan (DCP) dynamics negatively impacted the quarterly wealth margin by ~95 basis points. Management will transition economic hedges for DCP obligations to derivatives and increase the cash component of adviser compensation to reduce accounting-driven volatility; these changes will incur transitional costs and may cause near-term P&L noise.
Fixed Income and Commodities Weakness
Fixed income macro and micro results declined in Q4 versus the prior year, reflecting lower FX volatility and weaker corporate credit performance. Commodities revenues fell materially versus last year's Q4, primarily due to lower power and gas revenues after several large structured transactions benefited the prior-year quarter.
Performance and Mark-to-Market Volatility in Investment Management
Performance-based income in Q4 was modest ($71 million) as gains in U.S. private equity and private credit were offset by markdowns in an infrastructure fund, illustrating portfolio-level volatility that can affect quarter-to-quarter revenue recognition.
Macro, Geopolitical and Regulatory Uncertainties
Management emphasized the presence of geopolitical 'swirl', market uncertainties and a complicated macro backdrop that could create headwinds. The regulatory capital framework has normalized and, while CET1 is healthy (15%), future regulatory changes (Basel/GSIB/SRB calibrations) could alter capital deployment plans.
Tax and Quarterly Volatility Expectations
The firm's effective tax rate was 21.5% for the full year and 23.2% in Q4; management expects a 2026 tax rate between 22–23% and noted potential quarterly volatility in the reported tax rate.
Company Guidance
The firm’s guidance was largely conservative and execution‑focused: management is keeping its firm‑wide targets unchanged while saying it will “execute at or above” those goals in a welcoming market and deliver “higher lows” in tougher environments; near‑term financial guidance calls for Q1 net interest income roughly flat Q/Q with NII expected to trend higher through 2026 (assuming the forward curve, incremental loan growth and deposit mix), a 2026 tax rate of 22–23%, and a Q1 transition of DCP economic hedges to derivatives plus an increased cash component of adviser compensation. Capital and allocation guidance: CET1 ended 2025 at 15% with over 300 bps of excess capital, continued prudent dividend growth (quarterly dividend now $1.00 after four consecutive 7.5¢ increases) and opportunistic buybacks (FY2025 repurchases $4.6B, including $1.5B in Q4). Management anchored this guidance with 2025 performance metrics: total client assets $9.3T, FY revenues $70.6B (Q4 $17.9B), EPS $10.21 (Q4 $2.68), ROTCE 21.6% (Q4 21.8%), efficiency ratio ~68.4% for the year; business‑level metrics cited include Wealth net new assets $356B and fee‑based flows $160B (Wealth revenues $31.8B, 29% margin; Q4 Wealth $8.4B, 31.4% margin), AUM $1.9T, Institutional Securities revenues $33.1B (Investment Banking $7.6B; Equities $15.6B; Fixed Income $8.7B), standardized RWAs $553B, total spot assets $1.4T, deposits $408B, bank lending balances $181B and Q4 NII $2.1B.Morgan Stanley Financial Statement Overview
Summary
Income statement strength (Score 78) shows meaningful revenue step-up since 2023 and improving profitability, but it’s tempered by balance-sheet leverage risk/consistency issues (Score 64, including an inconsistency in reported 2025 debt vs prior years) and especially weak/volatile cash generation (Cash Flow Score 32 with mostly negative operating and free cash flow), which lowers earnings quality and financial flexibility.Income Statement
Revenue has stepped up meaningfully since 2023, reaching $116.1B in 2025, with profitability also improving (net margin ~14.5% in 2025 vs ~10.3% in 2023). Operating profitability is solid for the space (2025 operating margin ~18.9%), though still below the stronger 2021 levels (net margin ~26.0% and higher operating profitability), indicating some cyclicality/normalization from peak conditions. Overall, the income statement shows good scale and improving momentum, but with a history of margin volatility.78
Positive
Balance Sheet
Equity is sizable and growing ($111.6B in 2025 vs $99.0B in 2023) and returns on equity are healthy (about 15.1% in 2025 vs 9.2% in 2023). However, leverage appears elevated in most years (debt-to-equity roughly ~3.1–3.4x from 2022–2024), which is a key balance sheet risk factor in stressed markets. The 2025 debt showing as $0 (and 0.0x debt-to-equity) is inconsistent with prior years, so leverage trends should be interpreted cautiously based on the provided data.64
Positive
Cash Flow
Cash generation is volatile and frequently negative, with operating cash flow negative in 2020, 2022, 2023, and 2025, and free cash flow negative in every year except 2021. Even in 2024, operating cash flow was only slightly positive ($1.36B) while free cash flow remained negative (-$2.1B). This uneven cash profile weakens financial flexibility and makes reported earnings quality less consistent when viewed through cash conversion.32
Negative
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 116.11B | 103.14B | 88.29B | 62.48B | 57.78B |
| Gross Profit | 66.75B | 57.36B | 50.13B | 49.93B | 56.41B |
| EBITDA | 26.56B | 22.76B | 16.07B | 18.09B | 23.88B |
| Net Income | 16.86B | 13.39B | 9.09B | 11.03B | 15.03B |
Balance Sheet | |||||
| Total Assets | 1.42T | 1.22T | 1.19T | 1.18T | 1.19T |
| Cash, Cash Equivalents and Short-Term Investments | 111.69B | 401.59B | 461.89B | 467.86B | 500.35B |
| Total Debt | 0.00 | 360.49B | 339.04B | 308.75B | 305.36B |
| Total Liabilities | 1.31T | 1.11T | 1.09T | 1.08T | 1.08T |
| Stockholders Equity | 111.63B | 104.51B | 99.04B | 100.14B | 105.44B |
Cash Flow | |||||
| Free Cash Flow | -17.89B | -2.10B | -36.95B | -9.47B | 31.66B |
| Operating Cash Flow | -17.89B | 1.36B | -33.54B | -6.40B | 33.97B |
| Investing Cash Flow | -46.78B | -29.46B | -3.08B | -11.63B | -49.90B |
| Financing Cash Flow | 67.76B | 46.76B | -2.73B | 22.71B | 41.55B |
Morgan Stanley Technical Analysis
Positive
175.41
Price Trends
179.61
Negative
170.53
Positive
154.55
Positive
Market Momentum
-1.76
Positive
46.76
Neutral
56.55
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MS, the sentiment is Positive. The current price of 175.41 is below the 20-day moving average (MA) of 178.20, below the 50-day MA of 179.61, and above the 200-day MA of 154.55, indicating a neutral trend. The MACD of -1.76 indicates Positive momentum. The RSI at 46.76 is Neutral, neither overbought nor oversold. The STOCH value of 56.55 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for MS.
Morgan Stanley Risk Analysis
Morgan Stanley disclosed 73 risk factors in its most recent earnings report. Morgan Stanley reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Morgan Stanley Peers Comparison
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $280.05B | 18.19 | 13.91% | 1.55% | 2.31% | 44.49% | |
77 Outperform | $169.48B | 20.51 | 18.11% | 1.07% | 5.90% | 66.60% | |
69 Neutral | $280.66B | 17.30 | 15.60% | 2.14% | 7.22% | 48.18% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
67 Neutral | $832.79B | 15.42 | 16.06% | 1.79% | 1.89% | 12.32% | |
65 Neutral | $384.86B | 14.01 | 10.23% | 1.93% | 0.15% | 33.84% | |
58 Neutral | $208.04B | 16.63 | 6.72% | 1.94% | -0.62% | 105.57% |
* Financial Sector Average
MS
Morgan Stanley
175.41
48.84
38.58%
BAC
Bank of America
53.06
9.61
22.12%
C
Citigroup
116.00
39.45
51.53%
JPM
JPMorgan Chase
310.79
54.70
21.36%
SCHW
Charles Schwab
94.03
14.88
18.81%
GS
Goldman Sachs Group
922.24
308.62
50.30%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.