Morgan Stanley Downgrades BB&T (BBT) (Update)

Update (9:40 a.m.): Updated with Tuesday market open information.

NEW YORK (TheStreet) -- Morgan Stanley  (MS) downgraded BB&T  (BBT) to "equal weight" based on the stock's valuation. The firm set a target price of $43.

The stock was moving down 0.69% to $37.53 in early morning trading Tuesday.

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Separately, TheStreet Ratings team rates BB&T CORP as a "buy" with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate BB&T CORP (BBT) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its expanding profit margins, solid stock price performance, growth in earnings per share, attractive valuation levels and increase in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The gross profit margin for BB&T CORP is currently very high, coming in at 89.52%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 22.77% trails the industry average.
  • Compared to where it was 12 months ago, this stock has enjoyed a nice rise of 26.00% which was in line with the performance of the S&P 500 Index. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • BB&T CORP has improved earnings per share by 5.6% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, BB&T CORP reported lower earnings of $2.18 versus $2.70 in the prior year. This year, the market expects an improvement in earnings ($3.07 versus $2.18).
  • BBT, with its decline in revenue, slightly underperformed the industry average of 0.8%. Since the same quarter one year prior, revenues slightly dropped by 8.2%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • You can view the full analysis from the report here: BBT Ratings Report

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