Can Morgan Stanley Stock Sustain Its Pre-Earnings Rally?

The security has had a positive post-earnings reaction after 5 of its last 8 reports

Digital Content Manager
Jul 13, 2021 at 3:03 PM
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Blue-chip bank names JPMorgan Chase (JPM) and Goldman Sachs (GS) stepped into the earnings confessional today, kicking off another earnings season and making way for sector counterpart Morgan Staley (NYSE:MS). The equity is up 0.6% to trade at $93.26 at last check, ahead of its second-quarter earnings report, which is due before the open on Thursday, July 15. Below, we will dive into how the security has performed on the charts as of late, and explore some of its previous post-earnings activity. 

Morgan Stanley stock bounced off the $87 last week to come just shy of its June 7, all-time high of $94.27 today. Coinciding with that support level is also the 60-day moving average, which contained two of the security's most recent pullbacks. Year-over-year, MS is up 85.9%. 

MS 60 Day

Over the last two years, the equity has had a generally positive history of post-earnings reactions. More specifically, five of these next-day sessions were higher during the company's past eight reports, including a 6.6% pop in January 2020. MS has averaged a post-earnings swing of 2.1% in the last eight quarters, regardless of direction. This time around, the options market is pricing in a much bigger move of 4.3%.

The brokerage bunch is overwhelmingly bullish towards the security, with 10 of the 14 analysts in coverage sporting a "buy" or better rating, while four say "hold." Plus, the 12-month consensus price target of $98.53 is a 5.5% premium to the stock's current perch. 

Finally, Morgan Stanley stock's Schaeffer's Volatility Scorecard (SVS) sits at a high 86 out of 100. This means the equity has exceeded options traders' volatility expectations in the past year -- a boon for premium buyers.

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