Where Will Morgan Stanley Stock Be in 10 Years?

Morgan Stanley (NYSE:MS) share price has been on a tear, up by over 60% in the past year, and this year alone it’s extended that streak, rising 10% since the beginning of 2025.

Thanks to solid fourth quarter and full-year results, investors have been cheerily upbeat. Across the board from institutional securities to equity revenues and fixed income, as well as the core investment banking division, Morgan Stanley has been sailing on a rising tide.

The future looks bright too with current chief executive Ted Pick highlighting that the merger and acquisition pipeline was healthy and diversified.

The good news hasn’t been restricted to Morgan Stanley but extends to major Wall Street banks, which marked higher than anticipated profits buoyed by this economic optimism and increased deal-making. 

Now the question is will the momentum continue and if so what does the long-term look like for MS shareholders?

Incentive Change Drives Higher Revenues

One notable change effected by management was a change in the incentive structure to drive business. The top brass improved the remuneration structures of advisers who refer clients that help divisions of the firm secure business.

Beginning this year, the payouts on all types of gross revenues resulting from referrals were scheduled to be boosted to the tune of around 65% with the aim of attracting new customers, improving core client relations and boosting growth.

Another lever for growth has been to embrace technology more. For example, the firm invested in a partnership with OpenAI to design an application based on GPT-4 that is expected to improve the performance of the company’s wealth management.

The bank’s overall top line though is largely tethered to increased deal flows from M&A pipelines, which were at their highest levels in seven years in 2024, driven by cuts in interest rates, and expected flows from favorable business conditions due to the incoming Trump administration.

The intentional transition to steadier fees from wealth management post-2009 has also paid off with that division registering record asset management and higher clientele.

Overall, assets managed by the bank hit $7.9 trillion in the last quarter, and new growth is expected from the Workplace Division, which is related to IPOs.

Higher equity trading coupled with strategies of the firm in capital management, mainly in Asia and the Americas were a boon too. 

What Can Cause Uncertainties Ahead?

Even though there was lots to like in the most recent results, Morgan Stanley has been facing challenges related to failures in the anti-money laundering (AML) function.

The probes that were carried out officially by the Justice Department and Federal Reserve highlighted that the company was not scrutinizing high-risk international clients and suspicious accounts as well as they should have. To address these concerns, management has appointed a new chief of global financial crimes and also relied on AI to enhance AML procedures.

Apart from this, it still faces lingering risks of rising interest rates slowing down deal flow and hurting the M&A division. Meanwhile, policy uncertainty in the United States is a mixed blessing in that it may open opportunities and threats.

Although deregulation may be in the pipeline (with the incoming administration), which is favorable to financial institutions, other policies such as tariffs and immigration restrictions may impact growth. 

The fixed-income market in the year 2025 in particular may be faced with challenges; take Stanley Druckenmiller’s bet as an example highlighting that cuts by the Fed at the short-end of the curve led only to higher rates on long-term bonds. If the bond market starts to disagree more vehemently with the Fed, it places Chairman Powell in a really tight spot whereby both hiking and cutting rates leads to more market outcomes.

Solid Financial Performance

The company saw net revenues of $16.2 billion for the fourth quarter, which was a 25.6% year-over-year increase compared to the $12.9 billion in the year-ago period. Net income rose substantially, more than doubling to $3.7 billion, or $2.22 per share, from the prior-year quarter value of $1.5 billion, or $0.85 per share.

For the full-year, net revenues came in at $61.8 billion, an increase of 14.2% from the $54.1 billion seen in the prior year, while it delivered a strong ROTCE of 18.8%. Plus, its expense efficiency ratio was 71% compared to 77% a year ago, which showed stronger revenues and expense discipline.

Strength across business segments was evident as Institutional Securities’ net revenues came in at $28.1 billion, an increase of 35% year over year from $23.1 billion a year ago, showing higher results across business lines and regions on strong client activity and improved market conditions. Wealth Management increased net revenues to $28.4 billion versus $26.3 billion a year ago.

Morgan Stanley has seen one of the strongest years in 2024, with net income applicable to Morgan Stanley at $13.4 billion, or $7.95 per share for the year, compared with $9.1 billion, or $5.18 per share, in the prior year.

Where Will Morgan Stanley Stock Be in 10 Years?

Morgan Stanley tends to follow economic cycles so its 10 year forecast is largely a function of the booms and busts of markets, however analysts right now assess the stock to be fully valued with fair value sitting at $135.17 per share.

Regardless, there is a lot to like about MS right now, including the 11 year streak of increasing dividends, the bank’s low price-to-earnings ratio relative to future growth and upgrade of 7 analysts of earnings forecasts for the upcoming quarter.

Having a 33 year streak of paying dividends and a yield of 2.69% now, Morgan Stanley may have a flush valuation but it’s still interesting enough to income investors to be a core holding over the next 10 years.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.