Morgan Stanley Earnings Preview: A Detailed Look At What To Expect

Morgan Stanley reports fourth-quarter 2025 results tomorrow (Thursday, January 15) before market open. The stock price (NYSE:MS) has fallen 1.93% in the past week leading in to earnings, as markets get to grips with some of the early names out of the gate. For Morgan Stanley, the quarter will determine whether the firm’s integrated model can sustain the earnings power demonstrated in the third quarter, when $2.80 EPS on $18.2B revenue forced a 33% upward reset in consensus expectations.

The Street now expects $2.11 EPS on $16.67B revenue, a sequential deceleration that reflects uncertainty over whether investment banking momentum and Wealth durability can offset any normalization in trading conditions.

Consensus sits 1% above the prior-year quarter but embeds a 25% sequential decline from the third quarter’s $2.80 print. The estimate range of $1.96 to $2.30 captures divergent views on how much of Q3’s strength was repeatable versus opportunistic. Upward revisions accelerated modestly in the past 30 days (9 upward versus limited downward movement), yet the absolute level of the bar reflects caution that trading volatility may moderate and that investment banking, despite an all-time high pipeline cited in October, converts deals on a lagged basis.

The outcome will clarify whether the stock’s 48% one-year gain and 19.1x P/E multiple (below the 25.8x Capital Markets industry average but elevated versus Morgan Stanley’s own historical range) can be sustained. A beat driven by Wealth and investment banking would support the thesis that the franchise is less reliant on episodic trading strength. A miss, or a beat accompanied by soft forward commentary on deal conversion or Wealth asset flows, would likely trigger profit-taking after the stock’s run from $92 in early 2025 to recent highs near $189.

Consensus Estimates

The consensus $2.11 EPS represents a 25% sequential decline from the third quarter’s $2.80 but a 12.3% increase versus the prior-year period. The estimate range of $1.96 to $2.30 is narrower than typical for Morgan Stanley, suggesting analysts have converged on a view that the quarter will show solid year-over-year growth but material deceleration from Q3’s exceptional performance. Revenue consensus of $16.67B sits 8.4% above the prior year but 8.4% below Q3’s $18.2B, reflecting expectations that equity trading volatility moderated and that investment banking, while improving, has not yet reached the run rate implied by management’s pipeline commentary.

Estimate momentum turned modestly positive in the past 30 days, with 9 upward revisions and no downward moves. The $0.05 increase in consensus over that period suggests analysts are incorporating evidence of sustained deal activity and Wealth asset growth, but the magnitude of the move is restrained relative to the third quarter, when the Street was forced to raise estimates by 33% after the print. The key risk is that consensus, while higher than a year ago, may still underestimate the durability of investment banking momentum if deal conversion accelerates into year-end.

Management Guidance and Commentary

Morgan Stanley does not provide formal quarterly EPS or revenue guidance ranges in its earnings releases. Instead, management frames expectations through commentary on business momentum, pipeline visibility, and strategic priorities. In the third-quarter earnings call on October 15, 2025, management emphasized the strength of the investment banking pipeline and the durability of the Wealth franchise.

Management cited an “all-time high” investment banking pipeline in the third quarter, signaling confidence that deal activity would continue to improve as CEO confidence and market conditions supported M&A and underwriting activity.

The absence of formal quarterly guidance means the Street’s expectations are derived from management’s qualitative tone rather than specific numerical targets. The third-quarter commentary on the investment banking pipeline was the most explicit forward-looking signal, and it drove analysts to model higher investment banking revenues for the fourth quarter. However, the lag between pipeline build and revenue recognition creates uncertainty over how much of that pipeline converted into fees during Q4.

On Wealth Management, management has consistently emphasized progress toward long-term goals of scaling client assets and maintaining pretax margins near 30%. The third quarter delivered record Wealth revenues and a pretax margin at the target level, reinforcing the narrative that this segment provides stable, compounding earnings even when trading conditions normalize. The fourth-quarter result will test whether Wealth can sustain that margin profile and continue to grow assets in a period when equity markets were volatile and client activity patterns may have shifted.

Analyst Price Targets & Ratings

Wall Street maintains a positive outlook with 80% of analysts rating shares a Buy or Strong Buy. The consensus target of $185.33 implies modest 1.4% upside from current levels, reflecting the stock’s strong performance and elevated valuation. The narrow upside suggests analysts view the current price as largely reflecting the firm’s fundamental improvements but see limited room for multiple expansion without further earnings growth.

Sector & Peer Comparison

Morgan Stanley trades at 19.1x trailing P/E and 17.0x forward P/E, a premium to the universal banks (JPMorgan at 14.2x, Bank of America at 13.9x, Citigroup at 12.4x) but a discount to pure-play wealth manager Charles Schwab at 28.3x. The valuation positioning reflects the market’s view that Morgan Stanley’s integrated model, combining capital markets with wealth management, deserves a multiple above diversified banks but below pure wealth franchises.

Earnings Track Record

Morgan Stanley has beaten EPS estimates in 15 of the last 18 quarters, an 83.3% beat rate that ranks among the most consistent in the Capital Markets sector. The average surprise of 11.9% reflects a pattern where the Street systematically underestimates the firm’s ability to monetize volatility in trading and convert pipeline into investment banking fees. The four consecutive beats in 2025, with surprises ranging from 8.7% to 35.9%, demonstrate that this pattern has accelerated as capital markets conditions improved.

Post-Earnings Price Movement History

Morgan Stanley’s post-earnings price reactions have been muted despite consistent beats, with an average next-day move of negative 0.2% and a median of positive 0.3%. The average move on beats is negative 0.5%, a counterintuitive pattern that reflects the market’s tendency to focus on forward guidance and business mix rather than the magnitude of the quarterly surprise.

Expected Move & Implied Volatility

The options market is pricing a 3.8% expected move for Morgan Stanley around the earnings release, equivalent to a range of $175.80 to $189.70. This implied move is significantly larger than the historical average next-day reaction of 0.2%, indicating that options traders are positioning for a more volatile response than the recent track record would suggest.

Expert Predictions & What to Watch

Key Outlook: Guidance Will Drive the Trade

Key Metrics to Watch

The fourth quarter will test whether Morgan Stanley’s integrated model can deliver consistent earnings growth without relying on exceptional trading conditions. Management commentary on the cryptocurrency ETF strategy will be closely scrutinized, even though revenue contribution is unlikely to be material in Q4. The forward guidance on 2026 will matter as much as the fourth-quarter result, with consensus expectations calling for $10.73 EPS on $74.52B revenue.