Morgan Stanley's ( MS) earnings promise a respite from Wall Street's subprime worries.

The white-shoe brokerage firm is due to post numbers early Wednesday. Analysts expect the company to earn $2.01 a share, up 15% from the year-earlier quarter.

The news comes as CEO John Mack heads into his third year atop the New York firm. Investors have been pleased with Mack's emphasis on the higher-margin asset management and retail brokerage businesses as well as his decision to spin off the Discover credit card business.

But even with the stock trading near its 52-week high, some observers say there's a show-me aspect to the Morgan Stanley story.

"The issue with a Morgan Stanley is going to be, 'OK, guys, how fast will you be able to deliver on Mack's promises on asset management and retail?'" says Brad Hintz, an analyst at Sanford Bernstein who has a market perform rating on Morgan Stanley.

Investors are intrigued the impending spinoff of Morgan Stanley's credit card and payments unit, Discover Financial Services. Discover is expected to begin trading on the New York Stock Exchange later this month under the ticker DFS.

Morgan Stanley said in December it would spin off the credit card arm to focus more on trading, managing money for the wealthy, and investment banking. The move could be a good one for Morgan Stanley investors, given the runaway gains in rival MasterCard ( MA).

Jeff Harte, an analyst at Sandler O'Neill & Partners, wrote in a recent note that the "perception of the spin as a catalyst for Morgan Stanley shares may become a self-fulfilling prophecy."

Harte has a buy rating on Morgan Stanley. For his part, Hintz wonders just how long Discover will remain a public company before it gets snapped up.

To watch Laurie Kulikowski's video take of this column, click here .

"The debate on Discover is what will Discover be worth to an acquirer?" Hintz says. "Discover has historically been a slow-growth credit card franchise with relatively weak client demographics."

Investors expect Morgan Stanley to take a small hit on the fixed income side of its business, as the mortgage market drama continues to play out.

Morgan appears less vulnerable to emerging weakness in the mortgage market than peers Bear Stearns ( BSC), Lehman Bros. ( LEH) or Goldman Sachs ( GS). All three said second-quarter earnings were hit to some degree last week by bond market weakness, though Lehman and Goldman both posted strong quarters overall.

Hintz says Wall Street will be keeping an eye on whether Morgan Stanley might be hit by similar losses on so-called subprime mortgages.

"They're going to have to reassure the marketplace that their exposure to hedge funds that would have been involved in that sector is controlled," Hintz said.

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