-- Morgan Stanley (MS) is likely to reward shareholders through stock buybacks and dividend hikes, given its excess capital position following robust Q1 results, RBC Capital Markets said in a Wednesday research report.
The company's investment services business model with multiple growth engines delivered "outstanding" results in Q1, driven by its premier investment banking and trading businesses, the RBC analysts said.
Return on tangible common equity in Q1 expanded to 27.1% from a year earlier, which is a validation of the strategy of connecting institutional securities, wealth management, and investment management into a "unified flywheel" of earnings power, according to the note.
The brokerage now expects 2026 and 2027 EPS of $12.10 and $12.80, respectively, from $12 and $12.60 earlier.
RBC reiterated its sector perform rating on the stock and the price target of $207 per share.
Price: $188.62, Change: $-3.00, Percent Change: -1.57%