TLDR:
- Morgan Stanley expected to post 9.9% EPS growth to $2.22 and 9.4% revenue increase to $16.55 billion for Q1 2025
- Company has beaten earnings estimates for four consecutive quarters
- Options traders anticipate 9.4% stock move in either direction following earnings announcement
- Analyst sentiment is mixed with Erste Group downgrading to Hold while Bank of America maintains Buy rating
- MS stock is down 20% year-to-date despite growth expectations
Morgan Stanley is set to announce its first-quarter 2025 earnings on April 11, with Wall Street projecting solid growth despite ongoing market challenges. Analysts anticipate earnings per share of $2.22, representing a 9.9% year-over-year increase.
Revenue is expected to climb by approximately 9.4% to reach $16.55 billion compared to the same quarter last year.
The investment banking giant enters this earnings season with a strong track record, having exceeded consensus earnings estimates for four consecutive quarters. Its most recent quarter delivered a particularly impressive beat of 34.55%.
Mixed Analyst Sentiment
Recent analyst opinions reveal a divided outlook on Morgan Stanley’s prospects. Erste Group analyst Hand Engel recently downgraded the stock from Buy to Hold.
Engel cited concerns about lower revenue and profit growth in 2025 compared to previous years. He specifically pointed to increased uncertainty in the Investment Banking segment due to U.S. tariff policies and weakening economic growth.
The analyst also expressed worry about rising loan loss provisions in the bank’s interest-based income segment. With MS stock trading at a higher price-to-earnings multiple than the sector average, Engel believes upside potential may be limited.
Meanwhile, Bank of America analyst Ebrahim Poonawala maintained a Buy rating while lowering his price target from $150 to $144. Poonawala anticipates banks will adopt a cautious tone during earnings calls this quarter.
He highlighted potential downside risks due to policy uncertainties but noted it’s “too soon to expect meaningful credit cracks.” However, he acknowledged the possibility of increased reserves due to macroeconomic pressures.
Earnings Prediction Indicators
According to Zacks’ proprietary Earnings ESP (Expected Surprise Prediction) model, Morgan Stanley shows promising signs for an earnings beat.
The company currently has an Earnings ESP reading of +1.45%, indicating analysts have recently become more bullish on its earnings prospects. Combined with its Zacks Rank #3 (Hold), this suggests Morgan Stanley may exceed the consensus estimate.
Options traders are bracing for potential volatility following the earnings announcement. Current options pricing suggests traders expect approximately a 9.4% move in either direction after results are released.
Market Position and Stock Performance
Despite growth expectations, Morgan Stanley’s stock has struggled in 2025. The share price has declined 20% year-to-date, reflecting broader market concerns.
Wall Street’s overall sentiment remains cautiously optimistic. The current consensus rating stands at Moderate Buy, based on five Buy ratings and ten Hold ratings.
The average price target of $138.17 suggests significant upside potential of approximately 38% from current levels.
Investors will be closely watching not just the raw numbers but also management’s commentary on economic conditions. Of particular interest will be insights on how trade wars and economic headwinds might impact the bank’s key business segments.
The earnings call will likely focus on the outlook for investment banking activity, wealth management performance, and potential credit risk concerns in a slowing economy.
Morgan Stanley’s ability to navigate these challenges while maintaining growth will be critical to reversing its stock price decline.
For the financial services giant, Friday’s earnings report represents an opportunity to reassure investors about its resilience and growth trajectory despite the challenging economic environment.
The most recent analyst revisions point to modest expectations, with the consensus EPS estimate for the quarter being revised 0.51% lower over the past 30 days.
