Shares of Morgan Stanley (NYSE: MS) fell in pre-market trading on Wednesday even as the bank’s Q1 results beat estimates. The bank reported earnings of $1.70 per share in Q1 versus $2.02 in the same period a year back and surpassed consensus estimates of $1.68 per share.
The bank clocked revenues of $14.5 billion, a decline of 1.9% year-over-year but beating analysts’ expectations of $13.9 billion. However, Morgan Stanley’s institutional securities business which comprised 46.8% of its total revenues in Q1 saw its revenues decline by 11.2% year-over-year to $6.8 billion. This drop in revenues was driven by a 24% year-over-year fall in investment banking revenues.
James P. Gorman, Chairman and CEO of Morgan Stanley commented, “The Firm delivered strong results with a ROTCE [Return on Average Tangible Common Shareholders’ Equity] of 17% in a very unusual environment, demonstrating the strength of our business model. The investments we have made in our Wealth Management business continue to bear fruit as we added a robust $110 billion in net new assets this quarter.”
Overall, Wall Street analysts are cautiously optimistic about MS stock with a Moderate Buy consensus rating based on seven Buys, two Holds, and one Sell.
