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Morgan Stanley: Euro Rebound Winner

Morgan Stanley's shares have now declined 10% year-to-date, after dropping 44% during 2011.

The shares trade for just 0.4 times their reported June 30 tangible book value of $31.02, and for less than seven times the consensus 2013 EPS estimate of $1.96. The consensus 2012 EPS estimate is 90 cents.

Morgan Stanley reported sovereign and non-sovereign net exposure to "Euro Peripherals," including Greece, Ireland, Italy, Spain, and Portugal, of $4.2 billion as of June 30, with another $1.4 billion in exposure to France. Investors could be looking at a recovery play, based on the company's very low multiple to book value, and the hope that two days of strong and vague words from European leaders will be followed by quick, concrete action.

Atlantic Equities analyst Richard Staite said on July 20, after Morgan Stanley announced its disappointing second-quarter results, that "Morgan Stanley is planning to cut risk weighted assets within its fixed income, currency and commodities trading division," and that "the near term impact will be to further reduce earnings but will not immediately lead to a liberation of capital that can be returned to shareholders."

The analyst rates Morgan Stanley "Underperform," with a $15 price target, and estimates the company will earn 63 cents a share for all of 2012, followed by 2013 EPS of $1.56.

MS Chart MS data by YCharts

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

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

>Contact by Email.

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 TheStreet.com 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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