Citi downgrades Morgan Stanley: ‘We’d rather be on the sidelines’

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Bess Adler | Bloomberg | Getty Images
A person enters Morgan Stanley headquarters in New York, on Thursday, July 12, 2018.

Citi downgraded Morgan Stanley to neutral from buy on Thursday, saying the stock is “fairly valued.”

Shares of Morgan Stanley are up 22% year to date, trading at $48.26 at Wednesday’s close, slightly above Citi’s 12-month price target of $48. The stock was down about 0.5% in Thursday morning trading.

Citi ramped up earnings estimates for Morgan Stanley after its solid performance in the first quarter. The 2019 EPS forecast went up 30 cents to $5.05, and $5.55 for 2020.

“Strong 1Q19 results were driven by FICC and expense management,” Horowitz said. “Global Wealth Management beat expectations and [management] reiterated guidance for mid-single [net interest income] digit growth in 2019, in contrast to others in the peer group which has generally tempered NII expectations during this earnings season.”

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