Morgan Stanley (NYSE:MS) is up to bat Wednesday in announcing first-quarter results, and the pressure will certainly be on the bank to beat analysts estimates by a significant margin after Goldman, Sachs & Co. (NYSE:GS), Citigroup Inc. (NYSE:C) and Bank of America Corp. (NYSE:BAC) all crushed predictions.
With revenue from investment banking strong at Goldman and Citigroup, analysts have been lifting their expectations for former investment bank as well, according to
Fierce Finance. Investors also showed more mercy to Morgan Stanley during Monday's sell-off in financials, as the stock fell only about 5% ion a day when Bank of America tumbled 24%. Last week on to
CNBC, Dan Nathan of Phoenix Partners Group noted:
"the strong technical pattern of Morgan's stock chart, observing that unlike other financials that have had meteoric rises of late, Morgan's stock has had a much more sustainable rally that has been punctuated by higher highs, and higher lows."Overall the consensus estimate from analysts
polled by Thomson Reuters last week came at a loss of 9 cents in the first quarter, but with earnings of $1.53 in full-year 2009.
But last week, Fox-Pitt Kelton analyst David Trone upped his outlook for Morgan Stanley in light of the performance of its peers. Trone raised his earnings estimate 5 cents per share in the first quarter from a loss of 12 cents. Last March, he had cut his earnings estimate to a loss of 12 cents per share from a profit of 22 cents,
according to the AP.
However there are a number of factors that could trip Morgan Stanley up. Chief among them may be that assets may be hurt by $1.2 billion to $1.7 billion on accounting for recent gains in bonds valued at about $29 billion, according to
The Wall Street Journal. Citigroup was able to significantly boost its first-quarter earnings by booking a profit on the declining value of its debt, but the recent rise in the value of Morgan Stanley's bonds could prevent it from using similar accounting to lift its results. William Blair & Co.'s Mark Lane added that the bank will need to take an additional $250 million in charges tied to commercial real estate exposure, as he cut
first-quarter projections down to a profit of 1 cents per share. -
George White
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