Instant View: Morgan Stanley, Wells Fargo Q2 earnings

NEW YORK (BestGrowthStock) – Morgan Stanley (MS.N: ) (Read more about the money market today. ) reported a second-quarter profit (Read more your timing to make a profit.) on Wednesday, beating analyst estimates, despite weak industry trends.

The New York bank reported second-quarter adjusted second-quarter earnings of $1.4 billion, or 80 cents a share, compared to a loss of $138 million, or $1.36 a share, in the year earlier period.

Analysts on average expected earnings of 46 cents a share, according to Thomson Reuters I/B/E/S.

Meanwhile, Wells Fargo & Co (WFC.N: ), the nation’s No. 4 bank, reported that its net income fell to $3.06 billion, or 55 cents a share, from $3.17 billion, or 57 cents a share, in the year earlier quarter.

Morgan Stanley shares were up 2.3 percent in premarket electronic trading, while Wells Fargo rose 3.6 percent.

The following is reaction from industry analysts and investors:

TIM GHRISKEY, CHIEF INVESTMENT OFFICER, SOLARIS ASSET MANAGEMENT

“Morgan Stanley had a nice earnings beat. The Street had been coming down in terms of their estimates but this is still a nice solid quarter.

“Wealth management was a big driver here. Its results were in line with last quarter and that’s good in the weak market environment of the second quarter. Results on the trading side were not as weak as feared.

“Wells Fargo had a strong quarter on the bottom line. It beat on earnings. Revenues were exactly in line and margins expanded here. Credit seemed positive — and management is putting a positive spin on credit saying it’s recovering faster than they thought it would.

“On the negative side nonperforming assets were up and that was on mortgage weakness so there still are mortgages that are distressed. But there is a lot of new mortgage business occurring at the same time at higher credit standards.

“The market is reacting positively to both of these.”

HUGH JOHNSON, CHIEF INVESTMENT OFFICER OF HUGH JOHNSON ADVISORS LLC IN ALBANY, NY;

“It’s hard to find a way to overstate how good these earnings reports have been since Apple, Morgan Stanley.”

“Both reports from Morgan Stanley and Wells Fargo, along with the other reports we saw today, are very good and should

provide a positive start to the markets today.”

“Although we had good reports last night and today, that has not been the complete story of this earnings season. The economic numbers continue to remain soft.”

“It paints a very positive picture, there’s no question, but the picture is not 100 percent positive. It’s not over until it’s over, and we still have plenty of earnings reports and economic data to be released.”

“These numbers are great, but unless the economy strengthens it’ll be very difficult for the companies to repeat these numbers.”

GARY TOWNSEND, PRESIDENT AND CEO, HILL-TOWNSEND CAPITAL

“Both had very strong results, especially in the context of what was a difficult quarter. The story at Wells Fargo was a big improvement in credit, net interest margin expansion. Revenues in a difficult quarter were in line with the previous quarter and of course they beat on the bottom line.

“This is a good bank. They are integrating the Wachovia acquisition which will be very, very helpful to them. That’s one of the things that’s holding them back right now on revenue growth.

“Morgan Stanley is very impressive particularly in light of what happened to Goldman in the same period. Their trading revenues were not off nearly so much.

“Morgan was not leaning quite so strongly toward reduction in volatility as Goldman was . . . and the cost of disengaging and repositioning was high.”

MICHAEL HOLLAND, FOUNDER, HOLLAND & CO, WHICH OVERSEES MORE THAN $4 BLN:

Morgan Stanley: “John Mack and James Gorman are beginning to pull this thing together, after a long campaign. For them to turn in these results in this quarter is impressive. The revenue line is key, and it shows the overall business is healthy, and it’s a credit to the people reshaping the business.”

Wells Fargo: “Dick Kovacevich left a very strong legacy. It was a very challenging quarter, and they performed well. I think this stock will get an increased valuation and increased credit for what they do from investors.”

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(Reporting by Dan Wilchins, Matthew Lynley and Clare Baldwin)

Instant View: Morgan Stanley, Wells Fargo Q2 earnings