Morningstar has lifted Morgan Stanley valuation after strong earnings beat, as banks benefit from surging dealmaking, trading strength and upbeat 2026 outlook.Morningstar has raised its fair value estimate for Morgan Stanley to US$148 per share, up from US$140, after the financial giant beat expectations in its fourth-quarter earnings.
Morgan Stanley’s 4Q revenue increased 10.3 per cent to US$16.2 billion, compared with the same period last year.
Investment banking net revenues rose 47 per cent for the quarter, driven by higher completed M&A transactions across all regions. Fixed income net revenues fell nine per cent, reflecting lower results in commodities due to fewer structured transactions and in foreign exchange amid lower volatility.
For the full year 2025, Morgan Stanley reported record net revenues of US$70.6 billion, up 14.3 per cent from US$61.8 billion in 2024, with net income of US$16.9 billion, or $10.21 per diluted share.
The firm delivered a strong ROTCE of 21.6 per cent, while the standardised common equity Tier 1 capital ratio stood at 15.0 per cent at year-end.
Shares of Morgan Stanley jumped around six per cent in trading following the results on Thursday in New York.
“Morgan Stanley delivered outstanding performance in 2025,” said Ted Pick, chairman and chief executive officer. “Our performance reflects multi-year investments which have contributed to growth and momentum across the Integrated Firm.”
Total client assets in Morgan Stanley’s Wealth and Investment Management businesses grew to US$9.3 trillion, supported by more than US$350 billion in net new assets.
“Our Institutional Securities business served as a trusted advisor to clients as investment banking activity accelerated and global markets remained strong. The four pillars of the Integrated Firm – Strategy, Culture, Financial Strength and Growth – support our ability to drive long-term value for shareholders.”
Morningstar said it was impressed with the results and expects the bank to continue outperforming its long-term targets through 2026, supported by fiscal and monetary stimulus, a likely deregulatory tailwind, and a still-solid consumer spending backdrop.
“As we digest earnings, we’ve raised our fair value estimate for Morgan Stanley to $148 per share from $140,” director Sean Dunlop said. “The bulk of the increase is tied to a stronger near-term outlook in investment banking and trading, where results have remained robust driven by high asset prices, falling short-term borrowing costs, strong client risk appetite, and a solid economic backdrop.”
Morningstar said the earnings illustrate significant progress toward management’s long-term targets, describing them as “a validation of the firm’s outstanding wealth management business that represents the crux of its wide economic moat, and a clear demonstration of the power of the integrated bank amid an amenable market backdrop.”
The firm now expects 11 per cent industrywide investment banking revenue growth in 2026, with 28 per cent growth in Morgan Stanley’s core equity capital markets vertical.
“That implies a US$115 billion global revenue pool for investment banking and marks a significant lift from our expectation for a modest 2026 correction,” Dunlop said. “Against that backdrop, we expect 2.2 per cent growth for Morgan Stanley in institutional trading, in lieu of a modest correction, which we now expect to materialise in 2028.”
Meanwhile, Goldman Sachs also beat Wall Street estimates, with fourth-quarter profit benefiting from a surge in dealmaking and trading.
Net revenues were US$13.45 billion for the fourth quarter of 2025, three per cent lower than the fourth quarter of 2024, while net earnings were US$4.62 billion for the fourth quarter of 2025.
Investment banking fees were 21 per cent higher than 2024, at US$9.34 billion, primarily due to significantly higher net revenues in Advisory. The bank said this reflected a significant increase in completed mergers and acquisitions volumes.
Net revenues in debt underwriting were higher, reflecting significantly stronger results from asset-backed and investment-grade activity.
Net revenues in equity underwriting were also higher, driven by significantly higher net revenues from initial public and convertible offerings, partially offset by lower net revenues from secondary offerings.
The bank reported net revenues of US$58.28 billion and net earnings of US$17.18 billion for the year ended December 31, 2025.
Diluted earnings per common share jumped to US$51.32 for the year ended December 31, 2025, compared with US$40.54 for the same period in 2024.
Chairman and CEO David Solomon said since Goldman and Sachs’ first Investor Day, where the firm laid out its comprehensive strategy, it has grown revenues by 60 per cent, improved returns by 500 basis points and delivered total shareholder returns of more than 340 per cent.
“We continue to see high levels of client engagement across our franchise and expect momentum to accelerate in 2026, activating a flywheel of activity across our entire firm,” Solomon said.
“While there are meaningful opportunities to deploy capital across our franchise and to return capital to shareholders, our unwavering focus remains on maintaining a disciplined risk management framework and robust standards.”
