Is Morgan Stanley (MS) Still Undervalued After Advisor Departures And Forum Focus?

Conference spotlight and advisor moves put Morgan Stanley in focus

Morgan Stanley (MS) steps into this week with two very different storylines. The firm is hosting its Korea Industrials & Macro Forum while also seeing high profile advisor teams depart for Merrill Lynch and UBS.

Bank of America’s Merrill Lynch recently hired a Morgan Stanley Private Wealth Management group with about US$1.2b in client assets, part of a broader US$1.8b recruitment from several rivals. UBS has also brought in multiple advisor teams that managed roughly US$2.65b, including a Pueblo based group that previously handled US$1.4b at Morgan Stanley.

Morgan Stanley’s share price has eased 0.4% over the past day yet still shows firm momentum with an 18.4% year to date share price return, while a 42.9% 1 year total shareholder return and very large 3 year total shareholder return point to investors reassessing both growth potential and risk around headline events such as the Anthropic IPO role and recent advisor departures.

Scan how Morgan Stanley compares with other financial players seeing steady flows of client assets and capital markets activity by running the hand picked list of solid balance sheet and fundamentals (24 results).

Morgan Stanley has clear scale and reach across institutional and wealth clients, and the stock has already delivered strong multi year returns. The next step is to evaluate whether that kind of business is still sensibly priced today.

Most Popular Narrative: 9% Undervalued

The most followed narrative places Morgan Stanley’s fair value at $236.62, compared with the last close at $215.35, framing a moderate valuation gap that hinges on long term earnings power, margins and capital deployment.

The ongoing increase in global wealth, combined with the accelerating intergenerational transfer of assets, is boosting demand for comprehensive advisory and wealth management solutions, evidenced by record net new assets and a growing client base, which should drive higher recurring fee-based revenue and long-term earnings growth.

Read the complete narrative. Read the complete narrative.

Want to see what backs that fair value for Morgan Stanley in detail? The narrative leans heavily on recurring fee income, steady revenue expansion and a richer earnings multiple. Curious which specific growth and margin assumptions have been baked into that $236.62 figure, and how the discount rate shapes the end result.

Result: Fair Value of $236.62 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

Still, the narrative can unravel if fee pressure from passive products bites harder than expected, or if big tech and fintech platforms pull younger clients away from Morgan Stanley.

Find out about the key risks to this Morgan Stanley narrative.

Another View: Morgan Stanley Through The Cash Flow Lens

The narrative crowd leans toward Morgan Stanley being 9% undervalued. The SWS DCF model points a different way. On that framework, MS at $215.35 sits above an estimated future cash flow value of $206.15, which flags a modest premium rather than a discount. Which story do you think fits your own expectations for the business?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Morgan Stanley for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 31 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

If this mix of optimism and caution around Morgan Stanley feels familiar, treat it as your signal to review the figures yourself and decide what really matters to you. To weigh the potential upside against the concerns that other investors are flagging, start with the 3 key rewards and 2 important warning signs.

Looking for more Morgan Stanley style investment ideas?

If Morgan Stanley has sharpened your thinking, broaden your watchlist with a few targeted stock ideas sourced from Simply Wall Street's data driven screeners.

• Target durable compounding by reviewing companies with resilient balance sheets and consistent fundamentals through the list of solid balance sheet and fundamentals (24 results).
• Hunt for quality at a sensible price by scanning for potential mispriced opportunities using the 31 high quality undervalued stocks.
• Prioritise resilience and capital preservation by checking out equities that score well on risk metrics via the 10 resilient stocks with low risk scores.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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