Morgan Stanley shares pop as dealmaking drives record revenue under first-year CEO

Morgan Stanley’s profit more than doubled in the fourth quarter, fueled by a wave of dealmaking and stock sales that drove its revenue to a full-year record.

The earnings rounded out a robust quarter for Wall Street banks, which benefited from a surge in mergers and acquisitions due to a strong US economy, interest-rate cuts and expectations of lighter regulation under incoming President Donald Trump.

It also wraps up a strong first year for CEO Ted Pick, who had won a three-man contest for the top job. Pick said 2024 was “one of the strongest years in the firm’s history” as Morgan Stanley garnered record net revenue of $61.8 billion.

The outlook for 2025 is positive, Pick told analysts on a call on Thursday. “Values in the M&A pipelines are the highest in seven years, that is really encouraging. Some of this will be dependent on how things roll out in the first couple months of the incoming administration, and how things feel on a cross border basis, but the pent-up activity that we’re seeing is starting to release,” he said.

The CEO also said he is ‘bullish’ on the potential for stock sales, including initial public offerings.

The bank’s quarterly investment banking revenue rose 25% to $1.64 billion, led by fees from stock sales, echoing results at rivals Goldman Sachs and JPMorgan Chase on Wednesday.

Globally, investment banking revenue jumped 26% to $86.80 billion in 2024, according to data from Dealogic. Wall Street CEOs and dealmakers expect more large deals to be approved under the Trump administration than his predecessor Joe Biden.

Profit more than doubled from a year ago to $3.7 billion, or $2.22 per share, for the three months ended Dec. 31, compared with $1.5 billion, or 85 cents per share, a year earlier. Analysts, on average, had expected $1.7 per share, according to estimates compiled by LSEG.

Morgan Stanley shares closed up 4% at $135.81. Last year, they were among the top performers in the large-cap banking category, gaining nearly 50%.

Busier activity across geographies, notably in Asia and the Americas, lifted its equity trading revenue by 22% to a record.

Rating agency Moody’s said the results were credit positive and reflected an acceleration in trading revenue and strong asset flows.

Moody’s senior analyst Mike Tayano said the capital ratios increased meaningfully relative to the prior quarter, “aided by both strong earnings growth and seasonally lower risk-weighted assets, further expanding its capital buffer to 240 basis points above its regulatory requirement.”

After the earnings release, CFRA Research’s Kenneth Leon raised the 12-month target price for Morgan Stanley’s shares by $3 to $148. “We think Morgan Stanley benefits from favorable secular trends in the capital markets, wealth management, and investment banking,” he said in a research note.

Wealth management

Morgan Stanley’s revenue from wealth management rose 13% to $7.5 billion, helped by record revenue in asset management.

The unit provides the bank with stable income, offsetting the volatility from investment banking and trading.

The bank has set a target of managing $10 trillion in client assets and reached $7.9 trillion in the quarter.

Most of the net new assets came from financial adviser relationships, Chief Financial Officer Sharon Yeshaya said. Morgan Stanley’s CFO expects new IPOs this year to draw new assets into the bank’s workplace division, which manages relationships for company employees. 

Revenue rose 26% to $16.2 billion in the fourth quarter, also beating expectations of $15 billion, according to LSEG data.