Morgan Stanley’s stock maintained a relatively stable position on Friday following the release of its fiscal fourth-quarter 2025 results, which showcased solid growth across key financial indicators. The firm posted earnings per share of $2.68, marking an increase from $2.22 the previous year and surpassing the consensus estimate of $2.41. Net earnings rose 18% year over year to reach $4.397 billion, reflecting strong operational performance.
Bank of America Securities analyst Ebrahim H. Poonawala reaffirmed a Buy rating for Morgan Stanley shares, simultaneously raising the price target from $210 to $220. Poonawala emphasized that the firm achieved a record high stock valuation following core earnings of $2.73 per share in the quarter, outperforming both Bank of America's $2.32 forecast and the consensus $2.44 expectation.
The driving force behind these encouraging results is attributed largely to the dynamism within Morgan Stanley’s Wealth Management segment. This division demonstrated notable momentum during the quarter, generating $122 billion in net new assets. This figure more than doubled the $57 billion recorded in the same period the prior year, signaling strong client engagement and asset growth.
Operational efficiencies have also contributed to improved profitability metrics. Pre-tax margins increased by 400 basis points to 31%, indicative of enhanced cost management and revenue quality.
Management opted not to revise long-term targets during the earnings announcement but highlighted potential for elevated profitability. CEO Ted Pick remarked that favorable market and operational conditions could enable the firm to meet or surpass its comprehensive objectives, balancing disciplined execution with confidence in growth prospects.
Central to Morgan Stanley's strength is its multifaceted business model, which integrates global capital markets, its U.S. wealth management platform, and the brokerage capabilities offered through E*TRADE. Poonawala underscored this integration as a key competitive advantage that is difficult for other institutions to imitate. The inclusion of E*TRADE broadens the client base with younger investors and introduces exposure to emerging areas such as cryptocurrency and tokenization technologies.
Efforts to optimize synergies within this franchise continue to be a focus area, particularly regarding the conversion of advisory assets and cross-segment collaboration.
Looking ahead, artificial intelligence-driven productivity enhancements are anticipated to further support margin expansion. Poonawala projects that these technology investments, combined with operational efficiencies, could drive returns on tangible equity into the mid-20% territory, surpassing the firm’s current target of approximately 20%.
The timing of these improvements depends on factors including investment spending, capital allocation, and revenue conditions — variables that the firm will monitor closely as fiscal 2026 unfolds.
Consequently, the analyst adjusted fiscal 2026 earnings estimates upward by 4.5% to $11.45 per share. Additionally, the return on tangible common equity is forecast at 21.9%, reflecting stronger profitability expectations. Fiscal 2027 earnings projections were also increased to $12.35, driven primarily by higher anticipated revenue.
On the deposit front, growth surpassed forecasts, with an increase of 2.5% compared to a projected 2.0% rise. Management anticipates that wealth management net interest income will hold steady in early fiscal 2026, as elevated balances are expected to counterbalance any rate decreases, with income trends anticipated to improve later in the year.
Investment banking revenue is forecast to grow by 14% in fiscal 2026, while trading revenue is projected to increase by 2% year over year, indicating solid performance across Morgan Stanley’s market-facing operations.
Despite a valuation that some may view as elevated, Poonawala identifies potential upside risk to earnings estimates, supporting a positive outlook on the stock.
At the time of publication on Friday, Morgan Stanley’s shares were trading at $192.26, an increase of 0.54%, reaching a new 52-week high according to market data. This performance reflects strong investor confidence in the firm’s strategic positioning, operational execution, and future growth potential.