Morgan Stanley (NYSE:MS) shares are upgraded to a Buy rating from Hold. The move comes on the heels of the company reporting better than expected earnings and revenue for the March quarter. Investors also liked the results and lifted the stock price in pre-market trading on Wednesday.
However, CFRA analyst Ken Leon has retained the one-year price target of $50 on Morgan Stanley implying upside potentials of over 17 percent from the current levels. The analyst defended the price objective by applying a forward PE of 13.3X his 2017 EPS projection that is close to its biggest rivals. In his research note to clients, the brokerage said, “We see low-teen revenue growth in 2017. With large wealth management unit, we see rising rates benefiting interest income.”
Leon noted that Morgan Stanley delivered earnings of $1.00 a share, which is eleven cents a share more than the consensus of Capital IQ. Following this, he lifted his EPS estimate by 25 cents a share to $3.75 for 2017. Similarly, the analyst boosted his EPS view by ten cents a share to $3.95 for 2018.
The brokerage pointed out that trading revenue, which advanced 16 percent, witnessed string in equity, as well as, fixed income areas. Similarly, investment bank revenue grew 12 percent driven by enhanced equity underwriting and positive trend from M&A fees.
While announcing the results, Morgan Stanley chairman and CEO, James Gorman, commented, “We reported one of our strongest quarters in recent years. All our businesses performed well in improved market conditions. We are confident in our business model and the opportunities ahead, while recognizing that the environment remains uncertain.”
At time of writing this, shares of Morgan Stanley are trading up 3.06 percent in pre-market.