Story updated at 9:55 a.m. to reflect market activity.
Morgan Stanley gained 0.9% to $31.99 in morning trading.
The form maintained its "equal weight" rating for the stock. Morgan Stanley has focused on shifting its business mix, and is improving its capital and liquidity position according to analysts Jason M. Goldberg and Kenneth Hill.
"We believe its Investment Bank and Equities Sales & Trading are leveraged to improvements in the current backdrop, can see FICC retooling is well underway, anticipate continued growth in both Wealth and Investment Management, and understand it remains focused on expenses (comp & non-comp)," the analysts wrote. "Still, we believe additional progress from its 'bank' strategy and much more aggressive capital management on a micro level, and increases in market volumes/volatility and higher short-term interest rates from a macro perspective, are required for a double-digit ROE."