NEW YORK (TheStreet) -- Morgan Stanley (MS) - Get Report shares are down 0.37% to $34.89 on Wednesday after being downgraded to "neutral" from "overweight" by analysts at JPMorgan who kept the price target at $34.
The firm believes that the company will not meet its return-on-equity target despite its plan to restructure its fixed income and commodities unit.
"With wealth management earnings growing, we believe the pressure has lessened for management to shrink fixed income, currencies and commodities further, with the business in our estimates consuming about 45 percent of group risk-weighted assets and not generating cost-of-equity returns in 2016," said the firm.STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
TheStreet Ratings team rates MORGAN STANLEY as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate MORGAN STANLEY (MS) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- MS's revenue growth has slightly outpaced the industry average of 2.5%. Since the same quarter one year prior, revenues slightly increased by 0.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
- The gross profit margin for MORGAN STANLEY is currently lower than what is desirable, coming in at 33.06%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 19.79% is above that of the industry average.
- Net operating cash flow has significantly decreased to $548.00 million or 96.02% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, MORGAN STANLEY has marginally lower results.
- You can view the full analysis from the report here: MS Ratings Report