Morgan Stanley (MS) - Get Report fell on Tuesday after shares of the investment bank were downgraded by an analyst at Citigroup, who lowered his outlook on the stock to neutral from buy on what he sees as an already favorable stock-price valuation relative to expected returns.
Shares of Morgan Stanley were down 2.3%, or $1.32 a share, at $56.29 in morning trading on Tuesday after Citigroup analyst Keith Horowitz downgraded the stock, though raised his one-year price target by $2 to $60.
In a note to clients, Horowitz said that Morgan Stanley shares have “reacted very positively to the return targets outlined in the strategic update, with the stock outperforming the BKX by over 600 basis points on earnings day.”
The New York-based bank last Thursday posted stronger-than-expected fourth-quarter earnings amid hefty gains in its wealth management business. It also boosted its performance targets for the current year, in particular its so-called efficiency ratio, which tracks costs against revenue.
Morgan Stanley said earnings for the three months ended in December were $1.30 a share, up from 80 cents over the same period last year and well ahead of consensus forecasts of $1. Revenue rose to $10.39 billion, topping analysts' estimates of $9.74 billion.
TheStreet's Bret Kenwell also noted after the bank's earnings announcement last week that a good amount of positives are already baked into the stock price.
"After such a run - with the shares 46% above the September lows and up 14 of the past 15 weeks - investors are surely hesitant to put fresh capital to work in Morgan Stanley stock," Kenwell wrote .
"The momentum can certainly continue, though, and if that’s the case, $60 is not out of the question, particularly if the overall market holds up."