Goldman Sachs Removes Morgan Stanley (MS) from Conviction Buy, Cuts PT; Notes 'Outsized' Macro Exposure in Challenging Market
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Price: $26.32 --0%
Rating Summary:
7 Buy, 12 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 12 | Down: 17 | New: 21
Rating Summary:
7 Buy, 12 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 12 | Down: 17 | New: 21
Trade MS Now!
Goldman Sachs is taking Morgan Stanley (NYSE: MS) off of its America's Conviction List, cutting its rating to Neutral, and lowering its 12-month price target 20 percent from $20 to $16.
The firm notes Morgan Stanely being down 27 percent since January 29th, 2012, when it was added to the Conviction Buy list. Reason for adding include: conversion of the MUFG preferred stock to common in order to bolster equity capital ratios, elimination of the CIC preferred dividend, removal of the MBIA relationship//hedge overhang, write-down of legacy real estate assets, elimination of non-core asset management businesses, and near-completion of the integration of Smith Barney and Morgan Stanley Wealth Management.
Following Moody's ratings call, Goldman sees banks with the largest increase in funding spreads losing fixed-income market share. The firm also notes Morgan Stanley's outsized macro exposure, putting it at risk as the environment remains challenging. The firm commented, "While our 2012 earnings estimates for MS already reflect the current challenging environment, as the most pure-play capital markets bank under coverage we believe investors are unlikely to give credit for any significant improvement in activity in 2013.
Risks to the downside include: "worse than expected execution around MSSB integration or a meaningful loss of trading market share." Upside risks include capital markets activity rebounding faster than anticipated.
Morgan Stanley is indicated about 2 percent lower Tuesday morning.
For an analyst ratings summary and ratings history on Morgan Stanley click here. For more ratings news on Morgan Stanley click here.
Shares of Morgan Stanley closed at $13.48 yesterday, with a 52 week range of $11.58-$24.46.
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The firm notes Morgan Stanely being down 27 percent since January 29th, 2012, when it was added to the Conviction Buy list. Reason for adding include: conversion of the MUFG preferred stock to common in order to bolster equity capital ratios, elimination of the CIC preferred dividend, removal of the MBIA relationship//hedge overhang, write-down of legacy real estate assets, elimination of non-core asset management businesses, and near-completion of the integration of Smith Barney and Morgan Stanley Wealth Management.
Following Moody's ratings call, Goldman sees banks with the largest increase in funding spreads losing fixed-income market share. The firm also notes Morgan Stanley's outsized macro exposure, putting it at risk as the environment remains challenging. The firm commented, "While our 2012 earnings estimates for MS already reflect the current challenging environment, as the most pure-play capital markets bank under coverage we believe investors are unlikely to give credit for any significant improvement in activity in 2013.
Risks to the downside include: "worse than expected execution around MSSB integration or a meaningful loss of trading market share." Upside risks include capital markets activity rebounding faster than anticipated.
Morgan Stanley is indicated about 2 percent lower Tuesday morning.
For an analyst ratings summary and ratings history on Morgan Stanley click here. For more ratings news on Morgan Stanley click here.
Shares of Morgan Stanley closed at $13.48 yesterday, with a 52 week range of $11.58-$24.46.
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