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Why Morgan Stanley (MS) Stock has Plenty of Upside Left

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Financial stocks have received a boost following the Fed rate hike. Further, the Trump effect has also spurred the finance sector stocks. Morgan Stanley (MS - Free Report) is one such name.

Morgan Stanley’s shares have jumped 74.5% over the last six months compared with the Zacks categorized Investment Broker industry’s growth of 61.2%. Along with the above-mentioned factors, the company’s improved financial performance is perhaps one of the reasons for this bullish trend.

In addition, the stock’s Zacks Consensus Estimate for the current year has been revised upward by 3.4% to $2.73, over the last 60 days. As a result, it sports a Zacks Rank #1 (Strong Buy).



Looking at the fundamentals, Morgan Stanley’s cost savings plan – Project Streamline – is a success. Further, the company is on track to achieve its target of lowering expenses by $1 billion by 2017, amid several headwinds including CCAR resubmission expenses and potential future cost associated with Brexit.

In addition, Morgan Stanley expects revenue growth of 3–5% annually through the next year. Net interest income is also expected to keep growing, driven by efficient deployment of deposits. Further, management continues to target $4 billion yearly revenue from its fixed-income, currencies and commodities unit, despite its downsizing in the recent years.

However, lower level of client activity led to a slump in trading revenues over the last several quarters. Though there has been a gradual rebound, the chance of a substantial recovery in the near term is less likely as Morgan Stanley is in the process of restructuring its trading operations.

Other Stocks to Consider

Some other favorably ranked stocks in the finance space include The Goldman Sachs Group, Inc. (GS - Free Report) , Zions Bancorporation (ZION - Free Report) and KeyCorp (KEY - Free Report) .

Goldman has witnessed an upward earnings estimate revision of 4.3% for the current year, over the past 60 days. Its share price has risen 57.3%, over the last six months. It currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Zions also carries a Zacks Rank #1. It has witnessed an upward earnings estimate revision of 3.8% for the current year, over the past 60 days. Over the last six months, its share price is up 55.3%.

KeyCorp carries a Zacks Rank #2 (Buy). For the current year, over the past 60 days, its Zacks Consensus Estimate has been revised 6.7% upward. Its share price has increased 53.1% over the last six months.

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