Morgan Stanley: Fair Value Estimate Up to $97; Strong Start to Year and Outlook Generally Positive

We are increasing our fair value estimate for narrow-moat-rated Morgan Stanley to $97 from $88 per share. This implies a forward price/earnings ratio of about 13 times and a price/tangible book ratio of 2.4 times. Of the $9 increase in our fair value estimate, approximately $2 is from earnings accumulated since our previous valuation update. The remainder is from changes in our earnings forecast, such as from higher investment management revenue after the increase in US equity markets, and some lowering of how much shareholder equity we assess the company will need to retain for regulatory capital requirements.