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Morgan Stanley: Financial Loser

Stocks in this article: MS JPM I: BKX

NEW YORK ( TheStreet) -- Morgan Stanley (MS) was the loser among the largest U.S. financial names on Monday, with shares sliding over 4% to close at $14.30.

While the aftermath of JPMorgan Chase's (JPM) disclosure late on Thursday of a $2 billion second-quarter trading loss continued, with executive changes at the company and additional reaction from analysts, concerns over Europe predominated.

Greek politicians continued to struggle to form a new government following elections over a week ago, putting years of European bailout efforts at risk and leading to increased fears of a massive sovereign default and a possible exit from the euro.

The KBW Bank Index (I:BKX) declined 3% to close at 45.20, with all 24 index components showing declines.

Morgan Stanley's are down 5% year-to-date, following last year's 44% decline. The shares have pulled back 48% from their year-to-date closing high of $21.17 on March 26.

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The shares trade for just over half their reported March 31 tangible book value of $27.37, and for six times the consensus 2013 earnings estimate of $2.42, among analysts polled by Thomson Reuters. The consensus 2012 EPS estimate is $1.43.

Credit Suisse analyst Howard Chen rates Morgan Stanley "Outperform," with a $26 price target, and said on May 3 after meeting with chief operating officer Jim Rosenthal that he was "encouraged by Mr. Rosenthal's message on better controlling what can be controlled in light of a challenging operating environment and came away better understanding changes that have been made to improve the firm's operational and risk management framework."

Chen and said that "franchise restoration, healthier market conditions and the absence of new negatives from here could drive share price outperformance, and that his firm's "expectations for the company's weak return profile already is reflected in current valuations."

The analyst estimates that Morgan Stanley will earn $1.15 a share during 2012, followed by 2013 EPS of $2.20.

Interested in more on Morgan Stanley? See TheStreet Ratings' report card for this stock.

The company purchased $221 billion in mortgage loans during the first quarter.


-- Written by Philip van Doorn in Jupiter, Fla.

To contact the writer, click here: Philip van Doorn.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

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