What Is the Outlook for Morgan Stanley Shares?

We have noted Morgan Stanley's positive performance during today's afternoon trading session, during which it logged a 6.7% outperformance of the S&P 500. At its current price of $97.83, the company is now trading in range of its average target price of $94.63, which calls into question its ability to keep moving higher. Analysts have given the Capital Markets stock target prices ranging from $79.22 to $125 dollars per share, with an average rating of buy.

The market seems to share this rosy outlook, since Morgan Stanley has a short interest of only 1.4%. This represents the percentage of the share float that is being shorted, and each short position stands for an investor's expectation that the price of the stock will go down in the future.

When a stock is sold short, it means an investor has borrowed shares of the stock from their broker, and then sold them at the going market price. The investor hopes for the price to decline, so that they might buy those shares back at a lower price in the future. Once they do, they can return the borrowed shares to their broker, and keep the profit they made on the transaction.

Another way to gauge the sentiment on Morgan Stanley is to look at the percentage of institutions that are invested in the stock. In this case, 63.7% of the shares are held by pension, mutual, and hedge funds, which shows that these institutions probably have strong confidence in the stock.

If institutions are invested in a particular stock, it shows in most cases that they have performed quality research and concluded that it is a good investment. In some cases, however, increases in institutional ownership could be a sign of a takeover attempt or proxy fight, which can actually injure share prices. Also, institutions are not infallible, and can certainly make miscalculations -- often with spectacular results.

In conclusion, we see positive market sentiment regarding Morgan Stanley because of an analyst consensus of little upside potential, a buy rating, a very low short interest, and an average number of institutional investors. At Market Inference, we believe that any investment decision should be preceded by an in-depth analysis of the company's fundamental values and a comparison with similar stocks.

Here's a snapshot of some important facts to keep in mind about MS:

  • The stock has trailing 12 month earnings per share (EPS) of $6.89

  • Morgan Stanley has a trailing 12 month Price to Earnings (P/E) ratio of 14.2 compared to the S&P 500 average of 15.97

  • The company has a Price to Book (P/B) ratio of 1.8 in contrast to the S&P 500's average ratio of 2.95

  • Morgan Stanley is a Financial Services company, and the sector average P/E and P/B ratios are 13.34 and 1.95 respectively

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.