MS Stock Defies Gravity with Strong Earnings Beats and More to Come

Morgan Stanley (MS) stock is currently trading at $46.42 per share, down 0.34% or $0.16 in the after-hours trading session. The company has a market cap of $86.27 billion and a highly respectable 15.95 price/earnings ratio. The company has issued an earnings-per-share of $2.92. What is particularly notable for traders is the recent performance of the stock over the past 4 quarters. MS stock has generated strong earnings since Q1 2016. This is evident in the positive earnings surprises for the stock. For example, in Q4 2016, analysts forecast EPS of $0.65, while the actual EPS came in at $0.81. And when it comes to the financials, MS stock has performed strongly year over year since 2013. Consider that in 2015, the company generated revenue of $35.16 billion and earnings of $6.13 billion. That is markedly higher than the 2014 and 2013 figures. The history of the stock is a good indication as to the present performance. Analysts at Thomson Reuters have issued a buy rating on the stock (2.2), on a scale when 1.0 is a strong buy and 5.0 is a sell.

MS Stock and the Brexit Saga

Morgan Stanley is joining other big banks including HSBC, JPMorgan (JPM) et al that are now contemplating shipping UK-based jobs overseas. The Brexit has generated tremendous tension among the banking sector in the United Kingdom, and many big banks in the City of London are contemplating other destinations such as Paris, Luxembourg, Dublin, and Frankfurt. Morgan Stanley is likely to move its first batch of employees – 300 people – to another city, but it has not specified a timeframe yet. This announcement was made on Thursday, 23 February 2017. It is estimated that big international banks like Morgan Stanley, Goldman Sachs and JPMorgan will be shifting an estimated €1.8 trillion out of the City of London once the Brexit has been completed.

Nobody’s quite sure how this will affect the share price of Morgan Stanley, suffice it to say that it will have a disruptive effect on the UK economy. In total, some 30,000 jobs may be lost in the UK. Prior to the June 23 Brexit vote, Morgan Stanley announced that it would move 1/6 of its workforce in the UK abroad if Britons voted for a Brexit. Based on the pre-Brexit figure and the current number, this is a rather bullish assessment of the situation. The reason Morgan Stanley and other major banks would consider moving outside of the UK is so that they can retain their passporting rights to do business with all European countries. Presently, European banks based in London have passporting rights to trade with Europe and the UK and vice versa. The Brexit Saga will invariably affect the status of the City of London as the epicentre of European banking and finance.

What Factors are Driving the Price of Morgan Stanley Stock for Traders?

Saudi Aramco, the state-owned energy company that controls Saudi Arabia’s oil has just tapped 3 big banks to underwrite its IPO. These include Morgan Stanley, JP Morgan and British banking juggernaut, HSBC. These banks are expected to receive upwards of $150 billion of the $2 trillion company, according to the Saudi Arabian Deputy Crown Prince. This is big news for the bank, because the listing is likely to occur in 2018. However, if bureaucracy becomes a problem, the initial public offering will not take place until 2019. This is big news for Aramco too, since it has purportedly managed 260 billion barrels of oil for Saudi Arabia, with a capacity of 10 million barrels per day. Saudi Aramco has not yet listed an exchange for its IPO, but Toronto, London and New York are eager to snap up this deal.

Upcoming Events to Impact MS stock:

• The Next Earnings Date is slated for April 19, 2017
• The Fed FOMC will be meeting on Wednesday, 15 March 2017 (current probability of rate hike at 22.1%)

Short-term traders are going to favour a bullish position on MS stock, given the performance of the Dow Jones Industrial Average over the past eight days. Binary options traders will note that as of February 22, 2017, 0.9% of Morgan Stanley shares on the company were sold short. The short interest as at January 31, 2017 was 13,081,454 shares, down 34.2% from the January 13 figure of 90,889,169 shares. During its last financial quarter, the company earned $9 billion, while analysts expected just $8.51 billion to be generated. This stock is a short-term bull.