Morgan Stanley (MS)MS

Morgan Stanley: Comprehensive overview

Company Profile

• History & Background: Morgan Stanley was founded in 1935 by Henry Sturgis Morgan and Harold Stanley as a successor firm to J.P. Morgan & Co. after the Glass-Steagall Act separated commercial and investment banking. It became a public limited company in 1986.

• Core Business Areas:

  1. Investment Management & Wealth Management: Offering various investment products and solutions for individuals & institutions.
  2. Global Banking: Providing services to corporations, governments & institutional clients.
  3. Securities: Underwriting & trading of various types of securities including equity, fixed income & commodities.

• Leadership & Structure: The current CEO & Chair is James P. Gorman. The organization reports its results in 3 divisions: 1.Institutional Securities 2.Wealth Management 3.Investment Management.

Top Products/ Market Share

Key Products: 1. Morgan Stanley Investment Management (MSIM): Offering various mutual and exchange-traded funds. 2. MS Private Investment Management (PIVIM): Offering alternative investments, private credit & real-estate services 3. Wealth management platforms: Offering financial planning, advisory & brokerage services

Global Market Shares: (Data as of October 18, 2023):

• Global Investment Management comprises Investment Management & PIVIM arms of the company.

Total Addressable Market

Investment Banking and Trading: Global Investment Banking Market Size was USD 218 Billion in 2022 and is estimated to reach USD 318 Billion by 2028 (CAGR of 7.5%). Investment Management: Global Asset & Wealth Management Market was worth USD 92.24 Trillion in 2022, expected to reach 135 Trillion USD by 2028 ( CAGR 8.5%). Wealth & Retirement: Global Market size in 2022 is estimated at 3.4 Trillion USD and projected to reach 6.2 Trillion USD by 2028 (CAGR 12.8%).

Market Share Comparisons: Morgan Stanley holds a strong presence with several top ten rankings across its key business units:

Global Top Tier Investment Banks - Ranked 4th in 11m22, based on total global market share (Source : Refinitiv) Wealth Management - US Market

• #3 player, managing USD 3.2T in AAU

#4 player with 318k advisors ( Source: Cerulli Associates, June 22)

• #3 player, Managing USD 2.27 Trillion in assets (source: Statista 22)

Financial Performance: As per Morgan Stanley's earnings statement for Q3 FY 2023:

Total revenues: $14.8B , a decline of 4% year-over-year (YoY). Net Income of 2.6 Billion USD reflecting an 1.8% decline YoY.

• Revenue breakdown : Investment Banking (44%), Investment & wealth (39%). EPS was reported to be 1.38 USD
• The cash balance of $80B represents 5.9 % of total assets

Dividends & shareholder returns:

Dividend History: A consistent dividend payer for over 4 decades. The most current annual payout is USD 2.56, representing an approximate 4% yield (Source: Seeking alpha, Oct-19- 23).

Shareholder Return (Source: BarChart):

Growth TraTrajectory: Morgan Stanley experienced steady growth in AAU, assets under supervision (11%), net revenue (+33.7%), and headcount during COVID 19. However, growth has slowed since, with revenue declines during the last quarter (Q3FY23).

• Growth projections for Morgan stanley:

  1. Wealth & Asset Management segment: Projected 4.45 Billion USD in 2028 from 4 billion USD in (CAGR 1.44%)
  2. Investment Management Revenue : projected growth of 3.4 % CAGR to 4.35 Billion by 2028 (source: marketwatch )

• Recent growth initiatives : Morgan Stanley acquired Eaton Vance and E-Trade, expanding into asset and wealth management and retail brokerage, aligning with their growth plans.

Market Dynamics: The financial sector and the market that the company operates in faces various dynamics:

• Rising Interest Rates: Impacting investment banking activities as well as client investment strategies
• Increasing use and sophistication of technology: Leading to new tools for financial services.
• Regulatory landscape: Changing rules impacting financial markets and business practices

Morgan Stanley is well positioned within this dynamic:

• Diversified business model with a strong market presence across various segments of financial markets helps the company to manage the fluctuations.
• Commitment to innovation in technology has helped the firm adapt to changing customer and market needs,

Competitors: Morgan Stanley's major competitors include:

• Bank of America (BAC): Market share of 3.24% in global investment banking. Large wealth and investment management business.
• Citi Group (C): 4.15% market share in Global investment bank

• Wells Forgo & Co (WF) : A major force in the wealth and retirement business.
• Goldman Sachs (GS).

Key Challenge & Opportunities: Challenges include:

* **Technological disruptions**: Fintech firms challenging  legacy financial service companies.  
* Regulatory environment : Increasing regulations impacting business models 
**Competitive landscape**: Intense  pressure from competitors.

Opportunities

• Expanding in new markets such as Asia.
• Introducing new products: Such as ESG investments.

Recent Acquisition(s):

Morgan Stanley completed the acquisition of EATON Vance in March 2001 at 7 billion USD and E* TRADE in 3Q 2021 for 13 Billion USD.

• Eaton Vance Acquisition was mainly driven due its strong presence and expertise within investment management, particularly in mutual funds, helping Morgan Stanley to enlarge their asset and wealth management.

  • Acquiring ETrade expanded Morgan Stanley's presence into the retail broker market and increased their online and digital capabilities to reach a wider range of clients.

AI-Based fundamental Rating

• Based upon data from Marketwatch on October, 17 2023: Morgan Stanley received an AI-Based overall rating of 6 out of 10:

  • The firm has a solid financial position with a high current and quick ratios and good liquidity ratios.
  • The rating considers the market positioning, the company is well-established with strong brand recognition, a diversified business, strong client relationship, and geographic reach
  • However it faces a challenge in its future prospects and value investments with a low EPS.

Disclaimer

• This is just a sample analysis based on publicly-available data.
• This is not a substitute or an endorsement to any investment recommendation, nor a recommendation to purchase the stock. Please consult a qualified professional before taking any investment decisions based on this or similar information.

Sources

Market Watch: https:// www . market watch . com/

[Seeking Alpha -Morgan Stanley :https://seekingalpha /symbol/ MS ](https://seekingalpha. com/symbol / MS)

[Yahoo! Finance- Morgan Stanley : https:// finance . yahoo . com/ quote / MS / ](https:// finance.yahoo . com/ quotes / MS /)

[Reuters : https :// www reuters . com /finance/stocks /overview/MS ]

[Morgan Stanley Investor relations:https://www . morganstanley . com / investorrelations/]( https://www. morganstanley / investorrelations/ ).