UBS Maintains a 'Neutral' on Morgan Stanley (MS); Capital Outlook Improves

UBS maintains a 'Neutral' on Morgan Stanley (NYSE: MS) price target raised from $16.50 to $19.

UBS analyst says, "MS raised its year-end 2012 forecast for Basel III Tier 1 common, to “close to 10%” by the year end. Clearly, closing out the MBIA exposure was highly accretive to Basel III tier 1 common, but the firm is also narrowing the focus of its FICC operations, which should help the Basel III RWA outlook. In our view, this is probably the first step in working toward a strategic shift to slim down FICC and allow Equities to be the centerpiece of the franchise."

"MS shares have been very volatile, largely driven by macro concerns, and we prefer names with more visible catalysts. While we are encouraged by the momentum in MS’s equities business, we believe progress in its FICC business may remain uneven." (UBS lowers FY12 EPS estimate from $2.10 to $2.00 and FY13 lowered from $2.60 to $2.55)

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 $18.28 yesterday.

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