Nomura Securities Maintains a 'Neutral' on Morgan Stanley (MS); Attractive, But Difficult Earnings Backdrop

Nomura Securities maintains a 'Neutral' on Morgan Stanley (NYSE: MS), PT $25.

Nomura analyst, Glenn Schorr, said, "We are adjusting our MS model to reflect the earlier-than-expected conversion of $7.8 billion of MUFG convertible preferreds. Our 2Q EPS goes to a loss of $0.64 from a positive $0.40, but EPS ex the charge goes to $0.53 given the $0.13 benefit of skipping the preferred dividend. Though investors would like to see Morgan Stanley make progress at a faster pace and produce a stronger ROE, we think management is doing what it can in a very difficult earnings backdrop and methodically moving the firm closer to solid performance. Morgan Stanley’s stock looks attractive at less than 1.0x pro forma tangible book, but we remain Neutral on the shares as the difficult earnings backdrop will likely limit meaningful ROE improvement in the near term."

For more ratings news on Morgan Stanley click here and for the rating history of Morgan Stanley click here.

Shares of Morgan Stanley closed at $23.15 yesterday.

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