Jim Cramer: Hard to Believe Morgan Stanley Won't Deliver a Better Quarter

Morgan Stanley may have disappointed in the first-quarter earnings season but it could be due to report a far better quarter when it reports its performance Wednesday morning.
By Keris Alison Lahiff ,

Morgan Stanley (MS) - Get Report may have disappointed with its first-quarter earnings report but it could be due to report a far better quarter when it reports its performance Wednesday morning.  

"Morgan did not deliver a good quarter last time," said Jim Cramer, portfolio manager of the Action Alerts PLUS Charitable Trust, which holds industry peers Citigroup (C) - Get Report and Wells Fargo (WFC) - Get Report . "It's hard for me to imagine that [CEO James Gorman] won't deliver a better quarter this time." 

Giants such as Goldman Sachs (GS) - Get Report and JPMorgan Chase (JPM) - Get Report benefited from a rebound in trading revenue over the June quarter after a turbulent start to the year. Goldman, for example, enjoyed second-quarter rallies in deal-making and initial public offerings after volatility related to slumping oil prices and slowing Chinese growth hindered those operations from January through March.  

Morgan Stanley beat first-quarter estimates, though they were a low bar to clear. Trading revenue and investment-banking revenue took a huge dive over the first quarter, down 34% and 15%, respectively. 

"The first quarter was characterized by challenging market conditions and muted client activity," CEO Gorman said in a statement in April following the earnings release. "While we see some signs of market recovery, global uncertainties continue to weigh on investor activity."

The Wall Street bank is expected to post net income of $1.14 billion, or 59 cents a share, down from $1.55 billion, or 79 cents a share, in the year-earlier quarter. Revenue is forecast to decline 13% to $8.3 billion from $9.56 billion a year earlier.  

The stock had declined 11.2% in 2016. It's trading slightly higher on Tuesday.

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