MS: 2Q26 Beat on Capital Markets and Wealth; Raise Ests. and Target

Research evidence excerpt

MS: 2Q26 Beat on Capital Markets and Wealth; Raise Ests. and Target

ok regression, toward the high end of the historical valuations toward the lower end of the

peer SOP, historical multiples (1-yr forward range for each business line: ISG at 11x, historical range for each business line:

= 12.3x, 2-yr forward 10.2x), sum-of-the- Wealth at 20x, and Asset Management ISG at 9x, Wealth at 12x, and Asset

parts analysis, and dividend discount model. at 14x applied to a bull case 2026E EPS. Management at 9x applied to a bear

The price target assumes 15.9x our 2027E • Our bull case EPS assumes stronger IB case 2026E EPS.

(well above 10x avg) and 3.9x 2027E TBV, revenue and modestly higher trading, • Bear case EPS assumes lower IB

reflective of est. 26% ROTCE in 2027E. higher asset values helping Wealth and revenue, lower trading, flat asset values

Investment Management, a stable comp for WM and IM, a 100bp higher comp

ratio, and slightly higher non-comp exp. ratio, slightly higher non-comp exp,

• We calculate a bull case EPS of ~$18.50 higher provisions, and lower buybacks.

in 2026 trading at 16.5x. • We calculate a bear case EPS of ~$7.60

trading at 10.9x and BV ~$81.

Upcoming Catalysts Company Description

• 3Q26 earnings (October 2026) Morgan Stanley traces its roots to the aftermath of the great

• FOMC meetings (7/28-29/26) depression when it was forced to separate from JP Morgan as

• CPI release dates (8/12/26; 9/11/26) a result of Glass Steagall rules requiring banks to divest capital

• Fed annual stress test (June 2027) markets activities. Morgan Stanley remains a leading capital

• Company conference presentations throughout the year. markets firm (1/2 the firm), though now with a greater focus on

high net worth Wealth Management and Asset Management