Investment banking giant Morgan Stanley (MS) said Wednesday that it swung to its first quarterly profit in three quarters, even as commercial real estate losses continued to mount.
The New York-based company reported third quarter net income of $498 million, or 38 cents per share, compared with $7.7 billion, or $7.38 per share, in the year-ago period. Last year's results were bolstered by a big one-time gain.
Revenue fell 52% from last year, to $8.7 billion.
On average, Wall Street analysts expected a much lower profit of 29 cents per share, on much smaller revenue of $6.99 billion.
As the economy has worsened, companies more leveraged in commercial real estate investments, like Morgan Stanley, have become susceptible to big losses. The company said it lost $400 million in commercial real estate during the latest quarter.
Morgan Stanley shares rose $1.68, or +5.2%, in morning trading Wednesday.
The Bottom Line
We had removed shares of MS from our ''recommended'' list last Aug.12, when the stock was trading at $45.39. The company has a dividend yield of .62%, based on last night’s closing stock price of $32.52. The stock has technical support in the $25 price area. If the shares can continue their recent ascent, we see the next level of overhead resistance around the $37 price mark. We would remain on the sidelines for now.
