-- Morgan Stanley (MS) reported a "strong" Q1 driven by trading and investment banking, but Oppenheimer said in a note Thursday the stock's valuation appears stretched relative to its historical levels.
Q1 results came in well above its estimates, helped mainly by stronger trading revenue and better investment banking fees, with Morgan Stanley benefiting from strength in equities and select fixed income businesses driven more by business mix than a broader industry shift, Oppenheimer said.
Banking revenue improved sharply, supported by advisory, equity underwriting, and debt issuance. The pipeline remained firm and pointed to a gradual recovery ahead. Expenses were broadly in line with expectations despite higher revenue which reflects cost discipline alongside continued investment in talent and technology.
Morgan Stanley's capital position remained strong, with share buybacks higher than expected and management indicating that potential regulatory changes could be broadly capital neutral.
Oppenheimer kept its perform rating for Morgan Stanley, adding that its current valuation looks elevated relative to history, and said it prefers Jefferies Financial (JEF) over Morgan Stanley for now.
Price: $188.24, Change: $-3.38, Percent Change: -1.76%