Back to top

Analyst Blog

On May 9, we downgraded our long-term recommendation on major global bank Morgan Stanley (MS - Analyst Report), to Neutral from Outperform. The recommendation was lowered to reflect the persistently high operating expenses that the company continues to witness.

Why the Downgrade?

Though Morgan Stanley’s operating expenses decreased in the first quarter, we anticipate them to remain high in the near term, as restructuring initiatives announced will likely take time to benefit the financials. Further, these initiatives are not expected to fully control costs as the company continues to invest in franchise.

Nevertheless, Morgan Stanley’s adjusted earnings from continuing operations beat the Zacks Consensus Estimate. Better-than-expected results were mainly driven by a fall in operating expenses, partially offset by a decrease in revenues. Additionally, an improved asset position and stable capital ratios were the other highlights.

Following the release of first-quarter results, the Zacks Consensus Estimate for 2013 has remained stable at $2.10 per share. The Zacks Consensus Estimate for 2014 has inched nudged up nearly 1% to $2.57 per share. Thus, Morgan Stanley now has a Zacks Rank #3 (Hold).

Morgan Stanley has been striving hard to stabilize revenues. For this, the company plans to acquire the remaining 35% stake in Morgan Stanley Wealth Management (MSWM), its joint venture with Citigroup Inc. (C - Analyst Report). Once the company fully controls the JV, it will get one of the largest retail platforms, which will consequently lower its dependence on volatile trading revenues.

Stocks That Warrant a Look

Some major global banks that are performing better include JPMorgan Chase & Co. (JPM - Analyst Report) and The Goldman Sachs Group, Inc. (GS - Analyst Report). Both these carry a Zacks Rank #2 (Buy).

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
UNITED THER… UTHR 117.83 +28.51%
TRIQUINT SE… TQNT 20.67 +6.52%
RF MICRO DE… RFMD 12.47 +6.04%
VASCO DATA… VDSI 14.77 +4.68%
BANCO DO BR… BDORY 15.53 +3.95%