MS
Morgan Stanley
$214.54
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Fair Value
Trading 1.5% below fair value
You pay
$214.54
Bear
$152.42
Fair
$217.74
Bull
$283.07
Bear
$152.42
-29.0%
ROTCE 14.2% → 1.46x TBV
Fair
$217.74
+1.5%
ROTCE 19.0% → 2.14x TBV
Bull
$283.07
+31.9%
ROTCE 21.8% → 2.54x TBV
Key Value Driver
ROTCE (19.0%) vs. cost of equity (11.0%)
Implied Market Multiple
3.81x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $238.25 from 52 analysts, using a 35% weight on analyst consensus. That produces an estimated intrinsic value of $217.74 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: $132.07 (36% 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