Morgan Stanley

Despite a more difficult environment, Morgan Stanley had a strong quarter and managed an all-around beat. Their businesses have demonstrated resiliency across 2022 and have started 2023 on a positive note. The merging of Eaton Vance and E-Trade increased the company’s potential to gain new clients, increase assets, and support its stability. Besides, despite the volatility and clients’ tax-related withdrawals in the quarter, Wealth Management’s net new assets of over $50 billion highlighted the size of their company and ability to draw assets. Higher rates also helped Wealth Management generate a solid PBT and better margin in the face of a significant downturn in equities markets. Additionally, the Fed stress test confirmed Morgan’s unique business strategy even more. They have the freedom to invest for future growth and support their aggressive capital return program because of their diverse company mix and solid financial position. The bloom and Fusion Connect acquisitions are also expected to bring their fair share of benefits. We initiate coverage on Morgan Stanley with a ‘Hold’ rating with a revised target price.