Morgan Stanley (NYSE: M.S.) shares have advanced more than 8% since the beginning of August 2021, and the current share price stands around $104. The U.S. will publish the Nonfarm Payrolls report on Friday 03rd September, and this will be one of the main events of this trading week.
Fundamental analysis: Morgan Stanley increased its share repurchase program
Morgan Stanley has proven its stability during the first half of the 2021 fiscal year, and the second-quarter earnings results showed that it is moving in the right direction. Total revenue has increased by 8.3% Y/Y to $14.8 billion in the second quarter, while the GAAP EPS was $1.85 (beats by $0.20).
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Morgan Stanley increased its share repurchase program up to $12 billion over the next 12 months while the board of directors decided to double the quarterly dividend to $0.70 per share. Despite this, James Mitchell, an analyst from Seaport Global Securities, downgraded Morgan Stanley to Neutral from Buy after the stock’s next 12-month price to earnings ratio moved up from its 10-year average of 10.5x.
“With two major acquisitions accelerating its transformation, and Morgan Stanley now trading at 14.0x our above-consensus 2022E EPS of $7.50 (4% above consensus of $7.20), we believe this thesis has mostly played out,” said James Mitchell.
Wall Street’s three main indexes continue to trade near record highs after Federal Reserve Chair Jerome Powell signaled the U.S. central bank would continue to keep its ultra-loose monetary policy for now. Jerome Powell’s speech calmed fears over the tapering timetable, and the financial sector, especially banks, continues to be impacted by lower rates.
The U.S. will publish the Nonfarm Payrolls report on Friday 03rd September, and this will be one of the main events of this trading week. The U.S. economy is expected to have added 665K new jobs in August, while it is important to mention that Initial Jobless Claims for the week ended August 27 printed at 340K, better than anticipated.
A positive job report could influence FED to tighten its current policy sooner than later, which could add pressure on the U.S. stock market because the current ultra-loose monetary policy is good for risk-takers. Several Fed officials already warned it is nearly time for the central bank to begin pulling back on its monetary support, including the tapering of its asset purchases.
Technical analysis: $90 represents a strong support level
Morgan Stanley shares have advanced more than 8% since the beginning of August 2021, and the current share price stands around $104. Morgan Stanley shares remain in a buy zone; still, if the price falls below the $90 support level, it would be a firm “sell” signal and probably a trend reversal sign.
Summary
Morgan Stanley shares have been moving in an uptrend last several months, and for now, there is no signal of the trend reversal. Morgan Stanley has proven its stability during the first half of the 2021 fiscal year, but despite this, James Mitchell, an analyst from Seaport Global Securities, downgraded Morgan Stanley to Neutral from Buy.
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