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Morgan Stanley Will Weather Facebook Fallout: Analyst

NEW YORK ( TheStreet) -- Morgan Stanley (MS - Get Report) is likely to remain a top two technology underwriter along with Goldman Sachs (GS), despite "blunders in the pricing process" of the Facebook (FB - Get Report), initial public offering, according to a report published Friday from Bernstein Research analyst Brad Hintz

Morgan Stanley initially appeared to have scored a big win in being selected to lead the Facebook offering.

"In making their pitch to Facebook, Morgan Stanley bankers promoted their firm's ability to distribute Facebook stock through its retail brokerage distribution channel," Hintz notes in his report.

However, Facebook raised the price of the offering in the final days before its completion even as Morgan Stanley analysts were warning top investor clients of a revenue shortfall, according to Reuters.

Morgan Stanley "pulled defeat from the jaws of victory in a very public manner," according to Hintz's report. However, the analyst contends that "although the [Facebook] underwriting certainly hurts the prestige per share of [Morgan Stanley], the actual impact on the firm will be modest."

According to Hintz, "history shows that [equity capital markets] market shares are stable and [Morgan Stanley] has a long history of retaining #1 or #2 rankings as a U.S. technology sector underwriter. Bernstein does not believe the fallout from the FB IPO will permanently damage the investment banking franchise of the company."

-- Written by Dan Freed in New York.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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