Morgan Stanley’s Stock is a Big Buy
While many Wall Street players argue that stocks overall are a solid buy, one of them in particular will be a good name to own. That name is Morgan Stanley, which rallied this week on an upgrade from Keefe, Bruyette, & Woods. There are two parts to the thesis. Overall, the idea is that MS will improve its profit margins and return on common equity, and will do so two ways. Firstly, the firm seems likely to benefit from regulatory ranges to the way the Fed reviews banks. Secondly, if the equity market keeps rising, MS stands to gain disproportionately, as its banking business is more tied to equities than other Wall Street rivals.
FINSUM : The point on regulatory changes makes sense, but the equity-related argument is risky, because if stocks end up doing poorly, MS would likely suffer more than other banks.
- Morgan Stanley