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Morgan Stanley’s Valuation and Target Prices

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Nov. 20 2020, Updated 1:10 p.m. ET

Valuation

Morgan Stanley (MS) is trading at a forward PE ratio of 9.6x, which is ~16% lower than its five-year average PE ratio. The stock is trading at a PBV (price-to-book value) ratio of 1.0x. The valuation looks attractive based on these two multiples. Morgan Stanley’s forward PE ratio and PBV ratio are higher than Goldman Sachs (GS) but lower than JPMorgan Chase (JPM) and Bank of America (BAC).

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Analysts’ recommendations

Among the 26 Reuters-surveyed analysts covering Morgan Stanley, eight recommended a “strong buy,” 11 recommended a “buy,” six recommended a “hold,” and one recommended a “sell.” The mean target price for the stock is $52.1, which implies an upside potential of ~11% from its current price. The above graph shows analysts’ recommendations and target prices for Morgan Stanley over the past 12 months.

Peers’ recommendations

Around 40% of the 25 analysts covering Goldman Sachs rated it as a “buy.” The mean target price for Goldman Sachs is $230. Around 47% of the analysts rated JPMorgan Chase as a “buy.” JPMorgan Chase’s mean target price is $117.7. In comparison, 58% of the analysts rated Bank of America as a “buy.”

For the latest earnings coverage on bank stocks, visit Market Realist’s Financials Research page.

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