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Morgan Stanley Beats Revenue Forecasts

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Shares of Morgan Stanley (MS) saw a 1.3% increase in premarket trading on Tuesday, following the release of their quarterly results. While the bank and broker missed profit expectations due to special one-time charges, they managed to beat revenue forecasts by a significant margin.

Net income for the period dropped 32.2% to $1.52 billion, or 85 cents per share, falling short of the FactSet consensus of $1.07. This decline was primarily attributed to charges of 28 cents per share related to an FDIC special assessment and a legal charge. However, revenue managed to grow by 1.2%, reaching $12.9 billion, surpassing the FactSet consensus of $11.93 billion.

Morgan Stanley’s investment banking business played a key role in driving revenue growth, with investment banking revenue increasing by 5%. Notably, fixed income underwriting revenue saw a significant boost of 25%, while advisory and equity underwriting revenue remained flat. The bank’s equity, fixed income, and wealth management revenue were described as “essentially unchanged.”

Despite missing profit expectations, Morgan Stanley’s stock has performed well in recent months, climbing 13.9% over the past three months through Friday. Comparatively, the Financial Select Sector SPDR ETF (XLF) has advanced 12%, and the S&P 500 (SPX) has gained 9.4%. This suggests that investors remain optimistic about the bank’s future outlook.

Overall, Morgan Stanley may have faced challenges in terms of profit, but their strong revenue performance reflects the resilience of their investment banking business.

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