On Apr 5, 2013, we upgraded our long-term recommendation on
) to Outperform from Neutral. The upgradation was based on the
Federal Reserve's approval of its 2013 capital plan.
Why the Upgrade?
In Mar 2013, Morgan Stanley received approval from the Fed to go
ahead with its plan to acquire the remaining 35% stake in Morgan
Stanley Wealth Management (MSWM). Also, approval of its latest
capital plan reinforces the belief that the company's capital
position remains stable.
Morgan Stanley is expected to announce its first quarter 2013
results on Apr 18. The Zacks Consensus Estimate for the quarter
is pegged at 58 cents per share. The Zacks Earnings ESP (Read:
Zacks Earnings ESP: A Better Method
) for Morgan Stanley is 0.00% for the first quarter. This, along
with its Zacks Rank #3 (Hold), lowers the chance of a positive
Over the past 60 days, the Zacks Consensus Estimate for 2013
inched up 1.4% to $2.10 per share. Likewise, the Zacks Consensus
Estimate for 2014 advanced 3.2% to $2.56 over the same period.
Additionally, Morgan Stanley has been lowering its fixed income
and commodities risk-weighted assets (RWAs) since 2009. The
company continues to restructure its fixed income businesses by
doing away with complex structured product businesses. We
anticipate reduced RWAs to free-up capital that could be utilized
for enhancing shareholders' value.
Other Stocks Worth Considering
Although we prefer Morgan Stanley, there are other global banks
that are worth a look. These include
JPMorgan Chase & Co.
State Street Corporation
Bank of America Corporation
). The first two carry a Zacks Rank #2 (Buy), while the third
stock retains a Zacks Rank #3.
BANK OF AMER CP (BAC): Free Stock Analysis
JPMORGAN CHASE (JPM): Free Stock Analysis
MORGAN STANLEY (MS): Free Stock Analysis
STATE ST CORP (STT): Free Stock Analysis
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