This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Morgan Stanley Outpaces Financials: Upgrade Winner

Stocks in this article: MS BAC JPM I:BKX

NEW YORK ( TheStreet) -- Morgan Stanley (MS) was the winner among stocks of large U.S. banks on Wednesday as shares rose nearly 1% to close at $28.25.

The New York-based investment bank was a positive outlier on a mostly weak day for financial names as UBS analyst Brennan Hawken Tuesday upgraded Morgan Stanley to `buy' from `neutral,' while raising his 12-month price target to $33 from $28.00.

"We have been increasingly positive on MS given its progress transitioning to a more wealth management driven business model, and our initial Financial Advisors Survey reinforced an improving outlook for continued expansion of wealth management profit margins and earnings power," Hawken wrote in a note to clients.

The analyst raised his 2013 earnings estimate slightly to $1.80 a share from $1.77, and raised his 2013 EPS estimate to $2.80 from $2.60, "driven by a lower compensation ratio and higher net interest income in the Global Wealth Management segment."

Long-term interest rates have been rising in anticipation of a decline in Federal Reserve purchases of long-term bonds which have been running at a rate of $85 billion a month since last September. The market yield on 10-year treasury bonds has increased to 2.92% from 1.70% at the end of April.

Hawken added that his firm expects "average yields will begin to increase modestly in 2014, roughly in line with our net interest margin outlook for the universal banks."

Morgan Stanley during the second quarter completed its purchase of Citigroup's (C) remaining 35% stake in the companies' retail brokerage joint venture, for $4.7 billion. A more even split in revenue between wealth management and asset management, "should translate into a higher multiple" for Morgan Stanley's stock, according to Hawken.

Morgan Stanley's shares trade for 10.9 times the consensus 2014 EPS estimate of $2.59 among analysts polled by Thomson Reuters. The consensus 2015 EPS estimate is $2.95.

"Separately, we are raising our 2014 estimate for Bank of America (BAC) to $1.47 from $1.45, driven by improved expectations for their wealth management business." Hawken wrote.

The KBW Bank Index (I:BKX) pulled back slightly to close at 63.97 with all but eight of the 24 index components ending with declines.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,959.44 +154.64 0.87%
S&P 500 2,078.54 +7.89 0.38%
NASDAQ 4,781.4240 +16.0440 0.34%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs