Morgan Stanley Q4 Earnings Get a Boost from Equity Revenue and IPO Activity

The Key Takeaways

• Morgan Stanley exceeded revenue and profit estimates for the fourth quarter of 2008 by a wide margin, thanks to a strong market in equity securities and IPOs.
• Equity underwriting revenues grew by about 100 percent.
• Shares rose to a record close to the one set by late November.

Morgan Stanley (MS) shares advanced Thursday after the bank posted better-than-anticipated results as revenue from its equities trading unit soared and investors poured more money into initial public offerings (IPOs).

Morgan Stanley announced fourth quarter earnings per share of $2.22. This is nearly triple the amount reported a year earlier. Revenue increased by 26 percent year-overyear, to $16.22 Billion. Visible Alpha polled analysts and both of them easily outperformed their consensus expectations.

The Equity Net Revenue soars with increased client activity

Equity net revenue rose 51% to $3.33 billion on gains across all the company's business lines and regions, with Morgan Stanley pointing to increased client activity, especially in its Prime Brokerage and Asia market. Equity underwriting revenue doubled to $455 million, which it said was driven by "higher follow-ons and IPOs as clients strategically raised capital in a more constructive environment." Asset management fees and gains on the stock markets increased 11%, to $1.56billion.

Ted Pick, CEO of Ted Pick Inc. “an excellent fourth quarter,” If you have a tangible return on common equity of 20 percent, then that is a good ROIC. “followed three quarters of consistent execution.”

Morgan Stanley’s shares grew 2.5% in the morning on Thursday to close near their November high.

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