MS
Morgan Stanley
$201.03
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Fair Value
Trading 2.1% below fair value
You pay
$201.03
Bear
$143.78
Fair
$205.40
Bull
$267.03
Bear
$143.78
-28.5%
ROTCE 14.2% → 1.47x TBV
Fair
$205.40
+2.2%
ROTCE 19.0% → 2.16x TBV
Bull
$267.03
+32.8%
ROTCE 21.8% → 2.57x TBV
Key Value Driver
ROTCE (19.0%) vs. cost of equity (10.9%)
Implied Market Multiple
3.57x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $203.00 from 52 analysts, using a 35% weight on analyst consensus. That produces an estimated intrinsic value of $205.40 per share.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Dividend-based valuation: $121.20 (41% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly