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Morgan Stanley MS is set to announce second-quarter 2025 earnings on July 16 before the opening bell. The company’s performance and the subsequent management conference call are expected to grab attention from analysts and investors amid Trump’s tariff plans and consequences.
Morgan Stanley’s first-quarter performance was impressive, driven by solid investment banking (IB) and trading performance. This time, the company’s performance is likely to have been decent. The Zacks Consensus Estimate for second-quarter revenues of $15.92 billion suggests 6% year-over-year growth.
In the past seven days, the consensus estimate for earnings for the to-be-reported quarter has been revised 1.5% lower to $1.93. The figure indicates a 6% improvement from the prior-year quarter’s actual.
MS has an impressive earnings surprise history. The company’s earnings outpaced the Zacks Consensus Estimate in the trailing four quarters, the average beat being 20.3%.
IB Income: Global mergers and acquisitions in the second quarter of 2025 were better than expected. Markets plunged in early April after Trump announced sweeping tariffs, rattling business confidence. But as trade demand eased and policy direction became clearer, deal-making activities resumed in the last month of the quarter. Thus, decent deal-making activities are expected to have driven Morgan Stanley’s advisory fees in the quarter.
Yet, despite the company’s position as one of the leading players in the space, advisory fee growth is not likely to have been as impressive in the second quarter of 2025 as it was in the prior-year quarter.
The Zacks Consensus Estimate for advisory fees is pegged at $538 million, indicating a year-over-year decline of 9.1%. Our estimate for the metric is $588.8 million.
The IPO market in the second quarter saw a resurgence, with a significant increase in the number of IPOs and the amount of capital raised. This was driven by several factors, including strategic tariff pauses and positive economic data, which resulted in a rebound in market sentiment. Further, global bond issuance volume was decent. Despite the strong IPO performance, Morgan Stanley’s underwriting fees are not expected to have improved much in the quarter on a year-over-year basis. This is because the second quarter of 2024 witnessed an extremely robust underwriting performance.
The consensus estimate for fixed-income underwriting fees is pegged at $560 million, indicating a fall of 17% from the prior-year quarter’s actual. The Zacks Consensus Estimate for equity underwriting fees of $324 million suggests a decline of 8%. The consensus estimate for total underwriting fees of $884 million implies a drop of 13.9%.
Our estimate for fixed-income underwriting fees is $578.9 million, whereas the same for equity underwriting fees is $377.2 million.
The Zacks Consensus Estimate for IB income of $1.49 billion indicates a year-over-year decline of 8.1%. Our estimate for IB income is pegged at $1.55 billion.
Trading Revenues: The performance of Morgan Stanley’s trading business (constituting a significant portion of its top line) is expected to have been strong in the second quarter of 2025, supported by increased client activity and market volatility.
The uncertainty over the impacts of tariffs on the U.S. economy and the Fed’s monetary policy drove client activity as investors shifted to safe havens. Volatility was high in equity markets and other asset classes, including commodities, bonds and foreign exchange. Therefore, Morgan Stanley is likely to have recorded solid growth in trading revenues.
The Zacks Consensus Estimate for the company’s equity trading revenues is pegged at $3.46 billion, suggesting a rise of 14.8% from the prior-year quarter’s actual. The consensus estimate for fixed-income trading revenues of $2.23 billion indicates a rally of 11.5% on a year-over-year basis.
Our estimates for second-quarter equity trading revenues and fixed-income trading revenues are $3.30 billion and $2.12 billion, respectively.
Net Interest Income (NII): In the second quarter, the Federal Reserve kept interest rates unchanged at 4.25-4.5%. Despite an uncertain macroeconomic backdrop, the overall lending scenario was good. Thus, amid gradually stabilizing funding/deposit costs, Morgan Stanley’s NII is expected to have improved in the quarter, supported by higher rates and decent loan growth.
The Zacks Consensus Estimate for net interest revenues is pegged at $2.27 billion, suggesting a rise of 9.8% on a year-over-year basis. Our estimate for the metric is the same as the consensus estimate.
For the wealth management segment, the company expects NII to be relatively stable sequentially.
Expenses: Cost reduction, which has long been Morgan Stanley's primary strategy for remaining profitable, is unlikely to have provided much support in the June-ended quarter. As the company has been investing in franchises, overall costs are anticipated to have been elevated.
We expect total non-interest expenses of $11.6 billion, implying a 6.6% year-over-year increase.
Per our proven model, the chances of Morgan Stanley beating the Zacks Consensus Estimate for earnings this time are low. This is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better.
The Earnings ESP for Morgan Stanley is -0.11%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
MS currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the second quarter, the price performance of the MS stock was impressive. While shares of Morgan Stanley underperformed its close peer Goldman Sachs GS, the stock performed better than the Zacks Investment Bank industry, the S&P 500 Index and another peer, JPMorgan JPM.
JPMorgan is slated to announce quarterly numbers on July 15, whereas Goldman Sachs will release results on July 16. Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Over the past week, the Zacks Consensus Estimate for JPMorgan’s second-quarter 2025 earnings has been revised upward to $4.51. The consensus estimate for Goldman Sachs has also been revised upward to $9.43.
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This article originally published on Zacks Investment Research (zacks.com).
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