Q1 Preview: Morgan Stanley (MS) Looking to Beat the Street as Analysts Expecting Weak Quarter

Morgan Stanley (NYSE: MS) is set to report first-quarter results Thursday before the market opens, making it one of the last major US banks to issue quarterly figures for the most recent earnings season.

Ahead of the results, Morgan Stanley shares are very modestly higher. The stock last traded at $26.12, up 0.1 percent from Tuesday's closing price.

Analysts are currently expecting Morgan Stanley to post quarterly earnings of 34 cents per share on revenue of $7.89 billion. These estimates imply a 34 percent decline in earnings on a quarter-over-quarter basis and a 67 percent decline from the same quarter last year. On the top line, sales would be down almost 17 percent from the fourth quarter and down about 24 percent from the first quarter of last year.

Data from Bloomberg shows 15 firms have a Buy rating on Morgan Stanley, 12 have the equivalent of a Hold rating and two say Sell the stock. Analyst price targets currently range from $29 to $42.

Shares of Morgan Stanley are down about 4 percent on a year-to-date basis and down 16 percent from a recent high set in late-February.

Analyst Summary:

• Deutsche Bank - Expects a "relatively weak quarter" with EPS around 50c. The firm said "seasonal strength in trading (equity and fixed income) and mostly favorable top line trends in wealth management are partially offset by lower gains in asset management, weakness in investment banking (post the robust 4Q results), and some negative marks related to DVA and the MBIA hedge exposures." Buy rated with $35 target.
  
  
• Goldman Sachs - Recently lowered its quarterly EPS estimate by 60 percent from 80c to 32c. "Despite lower revenue, we expect expenses to be stable/higher given front office build out and relatively low IRCC revenue base." FY11 EPS estimate reduced from $2.75 to $2. Neutral rated with $31 target.
  
  
• KBW - EPS estimate recently slashed from 45c to 8c. "This reduction in our earnings estimates is due to expectations for a potential loss in its MUFG JV as well as expectations for higher compensation expense and modestly lower trading results." Market Perform rated with $30 target.
  
  
• Wells Fargo - Estimate cut from 35c to 26c on April 4. Concerned with "the accounting treatment for the expected loss on MS' 40% stake in Mitsubishi UFJ Morgan Stanley Securities Co." Market Perform rated with $27-$30 valuation range.

Stay tuned to StreetInsider.com's Earnings category to get all the breaking news on earnings from Morgan Stanley.

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