Morgan Stanley Earnings: Shares Priced for Perfection After Another Stellar Quarter

Key Morningstar Metrics for Morgan Stanley

• Fair Value Estimate: $148.00
• Morningstar Rating: ★★
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: High

What We Thought of Morgan Stanley’s Earnings

Morgan Stanley MS reported fourth-quarter 2025 earnings, posting outstanding 21.8% returns on tangible common equity, quarterly revenue growth of 10.3%, and improving efficiency ratios.

Why it matters: In our view, earnings illustrate significant progress toward management’s long-term targets, a validation of the firm’s outstanding wealth management business that represents the crux of its wide economic moat, and a clear demonstration of the power of the integrated bank amid an amenable market backdrop.

• For context, Morgan Stanley’s $9.3 trillion in client assets are within a hair’s breadth of the firm’s $10 trillion-plus long-term target, its 68.0% efficiency ratio clocked in ahead of its 70.0% target (lower is better), and its wealth management segment margins of 31.4% exceeded the firm’s 30.0% aspiration.
• Overall, we’re impressed with results and expect the bank to continue to outperform its long-term targets through 2026 amid fiscal and monetary stimulus, a likely deregulatory tailwind, and a still-solid consumer spending backdrop.

The bottom line: As we digest earnings, we’ve raised our fair value estimate for Morgan Stanley to $148 per share from $140. The bulk of the increase is tied to a stronger near-term outlook in investment banking and trading, where results have remained robust driven by high asset prices, falling short-term borrowing costs, strong client risk appetite, and a solid economic backdrop.

• We now expect 11% industrywide investment banking revenue growth in 2026, with 28% growth in Morgan Stanley’s core equity capital markets vertical. That implies a $115 billion global revenue pool for investment banking and marks a significant lift from our expectation for a modest 2026 correction.
• Against that backdrop, we expect 2.2% growth for Morgan Stanley in institutional trading, in lieu of a modest correction, which we now expect to materialize in 2028.