Wednesday, November 28, 2012

Time to Buy Morgan Stanley? “Enough is Enough” Says UBS

UBS analyst Brennan Hawken titled his note today upgrading Morgan Stanley (MS) to Buy “Enough is Enough.” He’s like the guy who comes over to the bullies who are beating up some little kid and tells them to quit it.

Morgan Stanley is down 24% in the past month. That’s one percentage point more than JPMorgan Chase (JPM) — you know, that bank whose future earnings are just about impossible to estimate.

Writes Hawken:

“Several exogenous factors have driven Morgan Stanley�s dramatic underperformance recently, and while these threats are real, it seems as though they are priced in. Totaling the impact of these headwinds would bring down our 2013 estimated EPS to just over $2.00 and an Return on Tangible Equity of 7%. Therefore, even reflecting these potential adverse scenarios, we believe MS shares should trade between 60% to 70% of adjusted Tangible Book Value, leaving room for about 30% upside from current levels.”

Hawken had a Neutral rating on Morgan Stanley before this, but because of the stock’s slide his price target was $21, well above Friday’s close of $13.46. His new target is $19. That still represents about 40% upside.

MS shares were recently trading 0.5% higher.

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