The investment bank reported third-quarter earnings applicable to common shareholders of $888 million, or 44 cents a share, increasing from $803 million, or 43 cents a share in the second quarter, and a net loss of $1.047 billion, or 55 cents a share, in the third quarter of 2012, when the company recorded a $2.3 billion debit valuation adjustment (DVA).
But excluding DVA, Morgan Stanley's third-quarter revenue came to $8.1 billion, compared to $8.3 billion the previous quarter, and $7.6 billion a year earlier. That is a strong third-quarter revenue result, when considering the pressure on trading revenue reported by the company's largest competitors.
Adjusted third-quarter earnings were 50 cents a share, soundly beating the consensus estimate of 40 cents, according to Bloomberg."[W]e view results favorably, representing another positive datapoint toward our positive thesis on the stock," wrote JPM Securities analyst Devin Ryan in a note on Friday. Ryan rates Morgan Stanley "market outperform," with a price target of $34.00. Please see TheStreet's earnings coverage for much more on Morgan Stanley's strong third-quarter results. The broad indices all rose on Friday. With the federal debt-limit and government shutdown resolved on Friday, investors turned their attention back to Federal Reserve policy. The Federal Open Market Committee last month surprised investors, with its decision not to curtail the central bank's purchases of long-term bonds, which have run at a rate $85 billion a month since September 2012. The KBW Bank Index (I:BKX) rose 0.4% to close at 65.52, with all but seven of the 24 index components ending with gains. Federal Reserve Bank of Chicago president Charles Evans on Thursday said the Fed shouldn't start reducing the pace of bond buying due to disruption to economic data during the government shutdown. Dallas Fed President Richard Fisher added that political dysfunction in Washington supports the case for not tapering in the near term. The next FOMC meeting will be held on Oct. 29-30. Saturation coverage of the next decision on the central bank's "QE3" stimulus policy will be sure to build over the next week and a half.
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