MORGAN & STANLEY - Stocks

Instrument description

Morgan Stanley is a respected financial holding company that provides a wide range of financial products and services to individuals, businesses, corporations, government entities, and other financial institutions. Morgan Stanley is regarded as a leading investment bank and a top company that provides authentic and purposeful financial advice and help to numerous individuals and enterprises.

Morgan Stanley is categorized as an investment bank that focuses on different matters of banking, such as raising capital for individuals and businesses by providing bonds, shifting from private to public ownership, and buying and selling businesses along with international deals and acquisitions. Apart from Morgan Stanley, other prominent investment banks include JP Morgan, Goldman Sachs, Bank of America, and Barclays.

Morgan Stanley provides its financial products and services to clients and customers in the US, Europe, Central and Middle Asia, and Africa. Morgan Stanley is headquartered in New York and has more than 60,000 employees. In 2018, Morgan Stanley was ranked 1st in global Initial Public Offering (IPO), and also number 1st in global equity. Morgan Stanley was also rated 2nd in worldwide Mergers and Acquisitions (M&A) deals. Morgan Stanley was ranked 67th in 2018 by Fortune 500 that listed the largest US business corporations based on revenue.

History of Morgan Stanley

Morgan Stanley was founded by two partners Harold Stanley and Henry S. Morgan, on September 16, 1935. Henry S. Morgan was the grandson of JP Morgan, who ran another popular name in investment banking. Both Henry Morgan and Harold Stanley worked in JP Morgan, but Glass–Steagall legislation was passed in 1933 that said that the bank's commercial banking and investment banking units would function separately.

In 1936, Morgan Stanley worked with a 24% market share based on private placements and public offerings. The current Morgan Stanley is due to the merger of Morgan Stanley with Dean Witter Discover & Co. in 1997.

In 1924, Dean Witter formed a brokerage firm by the name of ‘Dean Witter & Co’ in San Francisco.’ In 1929, the firm became a member of the New York Stock Exchange (NYSE), and in 1972, Dean Witter & Co started to trade publicly.

Dean Witter Discover & Co. merges with another securities brokerage company called ‘Reynolds & Co,’ and the new company was called ‘Dean Witter Reynolds.’ However in 1981, Dean Witter Reynolds itself is acquired by Sears, Roebuck & Co. Morgan Stanley was incorporated on October 1, 1981, as a financial holding company.

In 1986, Dean Witter Reynolds introduced the Discover Card. In 1993, the parent company Sears, Roebuck & Co. established Dean Witter and Discover as a separate publicly traded company which is named ‘Dean Witter Discover & Co.’

In 1997, both Morgan Stanley and Dean Witter Discover & Co are merged to form a new firm called Morgan Stanley, Dean Witter, Discover & Co. In 1998, the firm was renamed to ‘Morgan Stanley, Dean Witter & Co’. The name of the firm was changed to ‘Morgan Stanley’ in 2001.

Current Business and Investment of Morgan Stanley

Morgan Stanley is quite a renowned global company that excels in financial services. The company has a reputation for providing premium investment banking products and services to clients and customers, business corporations, big financial institutions, and government-managed companies. Morgan Stanley operates in three segments that are Investment Management, Wealth Management, and Institutional Securities.

• Investment Management provides a wide variety of financial strategies such as fixed income, equity, real estate, liquidity, alternative investments, merchant banking, endowments, and sovereign wealth funds through a network of intermediary and institutional channels.
• Wealth Management is a division that deals with the provision of annuity and insurance products, lending and credit products, and retirement plans. The wealth division also provides investment and brokerage assistance on numerous types of investments, which include Foreign Exchange, Stocks, Precious Metals, Fixed income securities, Mutual fund programs, Options, Futures Contracts, Alternative investments, Unit investment trusts, and Separately managed accounts
• Institutional Securities is a segment that offers different financial services on behalf of institutional investors such as capital raising, project finance, real estate, underwriting of debt, and financial advice on restructurings, mergers, and acquisitions. This segment also offers prime brokerage services, commercial and corporate loans, asset-backed lending, and residential and commercial lending.

Risk and Potential in Morgan Stanley Environment

Morgan Stanley reported $41.419 billion in revenue in 2019. Morgan Stanley’s operating income was $11.301 billion, net income was $9.237 billion, and total assets were $895.429 billion in 2019.

Morgan Stanley is one of the most trusted names in the banking and financial sector, and the company is known to offer capital and other investment solutions to a wide range of clients through its affiliates and subsidiaries. SWOT analysis is a strategic management tool that every organization uses to examine its business efficiency and take certain steps for future growth and sustainability. The SWOT analysis of Morgan Stanley is given by

• Strengths

Morgan Stanley is a global firm offering valuable investment, credit, and asset management solutions. Morgan Stanley is financially quite strong and stable, which ensures that it can easily raise capital for certain big business corporations. The company has over 60,000 employees, and it functions in over 35 countries. Morgan Stanley has remained a top institutional investor for many consecutive years. The company has a regular stream of Free Cash flow that ensures expansion in new projects.

• Weaknesses

Morgan Stanley has often had to face legal proceedings and pay a huge sum of money as legal fees. The company expects declining brand value due to sudden and frequent economic downturns. Morgan Stanley has not been able to tackle new entrants and lost considerable market share in the niche category. The company has difficulty moving into a new segment different than its core business.

• Opportunities

Morgan Stanley has the option to broaden its portfolio of services and expand to more international markets. Morgan Stanley can play its part in streamlining and helping two business companies in mergers and acquisitions. The company can focus and improve the wealth management segment, offer an online platform, and use data analytics for future growth.

• Threats

Morgan Stanley faces significant challenges when dealing with global recessions and complying with changing government policies and regulations. Morgan Stanley also has to face competition from rival brands that includes Goldman Sachs, Barclays, Deutsche Bank, JP Morgan, Merrill Lynch, and Citi Group.

Stock Analysis of Morgan Stanley

Morgan Stanley is listed and actively trades on the New York Stock Exchange (NYSE) with the ticker symbols ‘MS’. The company is listed under the ‘Finance’ Sector, and the industry is ‘Investment Banks/Brokers.’ Morgan Stanley is also a member of other indices such as the Dow Jones Industrial Average (DJIA), S&P-100 Index, and S&P-500 Index.

The all-time high share price of Morgan Stanley was $109.38 on September 11, 2000, and the average price in the last 52 weeks is $45.82.

The Coronavirus pandemic changed the economic outlook of the world, and businesses from every sector have been badly affected particularly the banks and other financial institutions. The Covid-19 outbreak led to the closing of businesses all over the world. But Morgan Stanley posted a record profit of $3.2 billion in the second quarter, which was opposite to the predictions of analysts.

Morgan Stanley reported net revenue of $13.4 billion at 31% growth, net income was $3.2 billion, and Earnings per Share (EPS) at $1.96, and Adjusted EPS at $2.04 at the end of the second quarter. The balance sheet, capital, and liquidity remain strong and stable. The Institutional Services segment net revenues of $8 billion with 56% increase, the Wealth Management unit posted $1.1 billion pre-tax income and net revenue of $4.7 billion at 6% growth, and Investment Management division posted net revenues of $886 at 6% increase and delivered net flows worth $15.4 billion.

The information above is for education purposes only and cannot be considered as investment advice. Past performance is not reliable indicator of future results.