Analysts from Credit Suisse and UBS Securities upgraded Morgan Stanley (NYSE:MS) Monday based on expectations profits will continue to grow and the share price will move up in conjunction with that growth throughout 2010.
Credit Suisse analyst Howard Chen changed his rating from “Neutral” from “Outperform,” while UBS Securities analyst Glenn Schorr upgraded Morgan Stanley shares from “Neutral” from “buy.”
Even so, results for the quarter ending December 31 are expected to be weak in spite of the more positive 2010 outlook for the company.
Part of the confidence in relationship to increasing revenue for the company is in their institutional securities unit, which is in the midst of hiring another 400 employees, which no doubt will generate significant revenue for the second half of 2010.
According to UBS Securities analyst Glenn Schorr, he sees the same results concerning the investment business of Morgan Stanley, and also notes that it has strong capital and liquidity as it enters the new year.
With new management taking over at the top level, it could take several months for all of this to settle down and work itself out,as James Gorman replaces current CEO John Mack, who is stepping down, but will be retained as chairman of the company.
Even with the new hires and strengthening focus on growing its investment banking business internally, the acquisition of the remaining shares of Smith Barney from Citigroup (NYSE:C) will be the major factor in profits and growth for 2010 for Morgan Stanley.
More than likely 2010 will start slow for Morgan Stanley and start picking up some steam in the second half. It doesn’t seem that anything outstanding will happen with the company, but it does look like they’ll enjoy some success in the second half of 2010, which could set them up for a nice run as the economy begins to recover in a sustainable way.
