Morgan Stanley (MS), a leading global financial services firm that provides investment banking, securities, wealth management, and investment management services is expected to report its second-quarter earnings on the 15th of July 2021. Despite the solid performance in the last 4 quarters, the US investment bank with $167.51B market cap is expected to post a decline in earnings of $1.64 per share, which represents a 19.6% fall y/y, and post revenues of 13.82B, up 3% y/y, earning it a 3-hold ranking on the Zacks’ Rank.

Known for beating earnings estimates, with the last two quarters’ earnings beating estimates by about 38% on average, the full-year MS Zacks’ consensus estimate still calls for a $7.05 earnings/share and $55.65B in revenue for 2021 which shows the optimism surrounding the stock. Zacks’ Most Accurate Estimate suggests that analysts have recently gone bullish on the company’s earnings prospects; coupled with the continuous level of unprecedented monetary stimulus and low-interest rates across the board another beat may be on the cards. The variance between the expected estimate and the actual data release can potentially cause an immediate price reaction where a beat would likely support price while a miss would likely pressure price but the subsequent comments from the company may determine the sustainability of such moves.

Morgan Stanley has decided to increase its common stock dividend by 100% to $0.70 and further announced a share repurchase plan of $12 billion to run over the next 4 quarters after the positive stress test results by the Federal Reserve. Having gained about 34% this year in its share price to current levels around $90, the MS stock is trading slightly above its fair value of $89/share according to Trefis’ estimate, which could call for caution as profit-taking is a risk while trading close to ATHs, but one can argue that the positives outweigh the risks of downside.

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After hitting a fresh all-time high at $94.40, #Morgan has retraced slightly towards the $90 level but remains within the upward price channel above the 20- and 50-day MAs and well above the 200-day MA, keeping the bullish momentum intact. Price has now broken above the resistance trend line from early June and the price wedge completed by the support trend line from April lows show the continued bullish trend; a better than expected earnings release should keep the bullish trend in shape and could see the asset break above previous highs at $94.40, using it as a springboard to create fresh all-time highs.

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

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