I have a character with skeletal and morph target animation, imported through FBX. When the animation is played from the Skeleton Editor or directly from within the Unreal Editor, the morph targets are animated as they should be.
When the same character is played or scrubbed from within the Sequencer, the morphs do not play, however, if the sequence asset is placed inside a level and the level is played, the morphs will play back. Sadly, this does not allow the use of the timeline for scrubbing or realtime editing in the sequencer editor.
Also (an fortunately at this point) they will also play back when the sequencer renders out frames.