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Morgan Stanley: Financial Loser

The four-week moving average for initial unemployment claims rose slightly to 343,000, up from the prior week's moving average of 340,750.

The Institute for Supply Management on Thursday said its Chicago Business Barometer -- The "Chicago PMI" -- fell by 4.4 to a reading of 52.4 in March, with new orders falling "sharply after three months of solid gains," and with production at its lowest since September 2009. Economists had expected the Chicago PMI for March to come in at 56.5. A level of above 50 indicates economic expansion.

The Bureau of Economic Analysis on Thursday released its third estimate of real gross domestic product growth for the United States during the fourth quarter. The GDP growth figure was revised to an annual rate of 0.4% for the fourth quarter, slowing from a rate of 3.1% in the third quarter. The Bureau said that the much slower growth pace in the fourth quarter "primarily reflected downturns in private inventory investment, in federal government spending, in exports, and in state and local government spending that were partly offset by an upturn in nonresidential fixed investment, a larger decrease in imports, and an acceleration in [personal consumption expenditures]."

Morgan Stanley

Shares of Morgan Stanley have returned 15% this year, following a 28% return in 2012. The shares trade for 0.8 times their reported Dec. 31 tangible book value of $26.81, and for 8.6 times the consensus 2014 earnings estimate of $2.56 a share, among analysts polled by Thomson Reuters. The consensus 2013 EPS estimate is $2.12.

Morgan Stanley's stock tends to be among the most sensitive to European economic uncertainty. The company reported that as of Dec. 31, its net risk exposure to "European Peripherals," including Greece, Ireland, Italy, Spain and Portugal, totaled $6.3 billion.

The company on March 14 announced that the Federal Reserve had approved its 2013 capital plan, which included no dividend increase or share buybacks, but would include the purchase of the remaining 35% stake in Morgan Stanley Smith Barney, still held by Citigroup.

BernsteinResearch analyst Brad Hintz rates Morgan Stanley "outperform," with a price target of $24, and said in a report on Tuesday that "a number of changes arising from the final MSSB buy-in should provide Morgan Stanley with an incremental ~$385 million in earnings in the 12 months following the acquisition." Hintz expects the company's annual earnings-per share-to increase by 20 cents, once Morgan Stanley completes the acquisition.
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