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Morgan Stanley Smashes Expectations In Stellar Q4 Report

From Morgan Stanley (NYSE:MS) early Tuesday posted much better than expected fourth quarter earnings results, led by big revenue growth in its institutional, trading, and fixed income units.

The New York City-based asset manager reported Q4 EPS of $0.81, which was a full $0.16 better than the Wall Street consensus estimate of $0.65. Revenues jumped 16.6% from last year to $9.02 billion, easily topping analysts’ $8.51 billion view.

Morgan Stanley said its Institutional Securities unit saw a massive increase in pre-tax income from continuing operations when compared with last year. That unit’s pre-tax income surged to $1.3 billion from just $548 million a year ago.

Sales and Trading net revenues also jumped to $3.2 billion, up from $2.3 billion last year. Equity sales and trading net revenues rose a more modest amount, to $2.0 billion from $1.8 billion. Fixed Income sales and trading net revenues surged to $1.5 billion from $550 million.

MS noted that as of the end of 2016, “book value and tangible book value per common share were $36.99 and $31.98, respectively, based on ~1.9 bln shares outstanding.”

The company commented via press release:

“Our quarterly results reflect consistent strong performance, while our annual results show meaningful earnings growth over 2015. We reported solid results in Sales & Trading and Advisory, and record revenues in Wealth Management, while managing expenses prudently. We are optimistic about opportunities in 2017 and beyond and remain focused on serving our clients and achieving our strategic objectives.”

Morgan Stanley shares rose $0.09 (+0.21%) in premarket trading Tuesday. Year-to-date, MS has gained 3.69%, versus a 1.57% rise in the benchmark S&P 500 index during the same period.

MS currently has a POWR Rating of A (Strong Buy), and is ranked #2 of 31 stocks in the Investment Brokerage category.

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