Earnings Preview: Morgan Stanley

Morgan Stanley (MS) is expected to report Q4 earnings before the market open tomorrow with a conference call scheduled for 11 am ET.

Guidance

The consensus estimate is 35c for EPS and $7.35B for revenue, according to First Call. The consensus range is 20c-60c for EPS and $6.90B-$7.96B for revenue. Investors may be concerned about Morgan Stanley's results after Goldman Sachs (GS) underwhelmed the Street with lower than expected Q4 revenue and basically in-line EPS. In addition, Citigroup (C) reported lower than expected Q4 trading revenue yesterday. Goldman, which saw a lack of conviction by clients due to the European debt problems, said that its net revenue from fixed income, currency and commodities trades plummeted 37% year-over-year. On the other hand, both Barron's and JP Morgan recently suggested that Morgan Stanley may be a better bet than Goldman. Morgan Stanley has adopted a more cohesive, stable mix of business under its new CEO, James Gorman, according to Barron's, which added that the stock's relatively low valuation could limit its downside.

Analyst Views

Meanwhile, JP Morgan on January 12 downgraded Goldman to Neutral from Overweight and said it prefers Morgan Stanley.