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Morgan Stanley (MS) recently triggered an Oversold Buy signal and responded with a short-term rally to 35.40. With the market experiencing sharp reversals to the downside this past week, MS sold down to its lower volatility band at 33.05. Morgan Stanley is expected to report earning this coming Friday, 10/17 and expectations are high. Its fellow investment bank Goldman Sachs (GS) will report earnings a day earlier, on Thursday 10/16. This will give an advance clue as to what Morgan Stanley may report.
Investors and traders should look upon current market weakness to buy MS at a discount to recent highs ahead of Friday’s earnings report. A decline to the 31.40 – 32.40 area would be very compelling.
As Morgan Stanley builds on the efficiencies of integrating the Smith Barney brokerage firm into the Morgan Stanley platform, their asset management business now becomes their highest priority.
MS has reduced its dependency on the more volatile capital markets and merger and acquisitions side of their business. With over $400 billion in assets under management, the investment and wealth management business now represents 67% of Morgan Stanley’s operating income with trading and M&A down to 33%. As an added kicker, MS has applied to build one of America’s first compressed natural gas export facilities in Texas. It is expected that construction will take 12 months after approval is granted. Along with Goldman Sachs, Morgan Stanley is one of only two major banks with legacy status to deal in physical commodities.
MS is in the very strong Broker–Investment Management group and should continue to outperform the market. If we do see a post-election rally, Morgan Stanley’s focus on equities as opposed to fixed income should benefit the stock as it is positioned to make continued new highs in price.
MS is expected to report earnings on 10/17/14 and has bested analyst estimates for both revenue and earnings per share in three of the past four quarters.
MS has a Neutral plus Chaikin Power Gauge stock rating. The underlying factors for Morgan Stanley are positive but the stock has corrected with the overall market. When the market resumes its uptrend, MS should respond to the bullish factors in the Power Gauge rating and be a market leader. The Financial Metric, Longer term Technical and Expert Opinion components are all positive for Morgan Stanley.
Plus:
Chaikin Analytics stock research
Chaikin Power Gauge stock rating model
NASDAQ Chaikin Power Stock Indexes
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
