Oppenheimer Analyst: Morgan Stanley Doing Well In Wealth Management, But It's Not Big Enough To 'Move The Needle'

Morgan Stanley MS came out with better than forecast first quarter earnings. While analysts were expecting EPS for the quarter to be around $0.78 on revenue of $9.19 billion, the bank declared an EPS of $1.18 on revenue of $9.9 billion.

Chris Kotowski, Senior bank analyst at Oppenheimer & Co., was on CNBC recently to break down the company’s results and discuss its wealth management business.

A Solid Quarter

“It was a good quarter, they did about 85 cents on a [core] basis we were looking for $0.81,” Kotowski said. “Street was around $0.78. So, a solid beat, it came primarily on the trading side in both equities and fixed income trading did better. Compensation ratio was down a bit versus our expectations so a good solid quarter.”

Wealth Management

Kotowski was asked how the quarter for Morgan Stanley’s wealth management division was. He replied, “It was good and I guess I have a minority point of view on this stock, which is that wealth management is a great business for them. It’s a non capital intensive business, it’s more stable, but on the other hand if you look at it in terms of total earnings per share.”

“The wealth management business will probably earn like a $1.10-$1.20 something like that this year. So, it’s a good business, they are doing well in it, but I am not convinced that it’s big enough to move the needle for them firm and the stock overall, the institutional securities group needs to work as well,” Kotowski concluded.