Morgan Stanley (MS) on Sept. 20 became the latest financial services firm to report stronger than expected results in recent weeks.
The New York company said its diluted earnings per share (EPS) from continuing operations were $1.75 during the three months ended Aug. 31 compared with $1.09 a year ago. "Despite challenging market conditions, Morgan Stanley achieved its best third quarter ever," John J. Mack, Chairman and CEO, said in a press release.
The stock surged 1.8% to $73.13 per share in early trading on the New York Stock Exchange.
Standard & Poor's noted that the results reflected "solid performance from most segments and lower expenses than we anticipated." Analyst Mark Hebeka hiked his earnings estimates and 12-month target price on the stock to $75 from $70 per share. He maintained a hold opinion on the stock. (S&P, like BusinessWeek.com, is owned by The McGraw-Hill Companies.)
Morgan Stanley's results follow other recent good news from financial services firms. Bear Stearns (BSC) reported EPS of $3.02 for the third quarter ended Aug. 31, 2006, up 12% from $2.69 per share for the third quarter of 2005. Lehman Brothers Holdings (LEH) reported on Sept. 13 that it earned $916 million in the quarter, up 4% from the same quarter last year, on revenues of nearly $4.2 billion, up 8% from last year. Goldman Sachs Group (GS) on Sept. 12 posted mixed results, but beat analyst expectations. The firm's net earnings slipped 1% for the quarter to $1.6 billion, while net revenues inched up 2% to nearly $7.5 billion.
The summer months are typically a slow season for financial services firms, with many away on vacation instead of doing deals. Uncertainty about energy prices, inflation and the global economy has roiled markets in recent months.